Does gross financial leverage influence firms’ dividend policy? An empirical analysis in the Italian market

How companies return their dividends is a matter of interest for many traders and academic researchers. The goal of this paper is to show how quantitative easing and level of corporate leverage affect companies’ dividend policy. Our main interest concerns the possible relationship between the gross financial debt to Ebitda ratio and dividend payout. In this study we consider 10 Italian listed companies (both public and private) from different and not related sectors. Considering a period of four years (2012-2015), after famous President Draghi’s ”Whatever it takes”, we test our hypothesis through a data-panel regression. The results highlight no significant relationship between level of debt and dividend payout ratio and potentially highlight the Board of Directors crucial role in managing dividend choices.