International Review of Business Research Papers Vol. 10. No. 2. September 2014 Issue. Pp. 62 – 80 Impact of Firm Specific Factors on Cash Dividend Payment Decisions: Evidence from Bangladesh Md. Faruk Hossain*, Rashel Sheikh** and S.M. Akterujjaman*** This study aims to explore the impact of firm specific factors on cash dividend payment decisions for a sample of 41 non financial firms listed in Dhaka Stock Exchange (DSE) in Bangladesh during 2007-2011. This study tests a null hypothesis that none of the firm specific factors namely profitability, size, liquidity, growth, earnings volatility, and managerial ownership has significant effects on cash dividend payments using fixed-effect regression model under the assumption that intercepts vary for each firm and the slope coefficients are constant across firms. Checking multicollinearity, cross-sectional dependence, autocorrelation and controlling heteroskedasticity in the regression analysis it is found that profitability has statistically significant positive effects on cash dividend payments. This study has discovered a significant negative effect of earnings volatility and managerial ownership on dividend payments which were unfolded before this study. On the other hand, size, growth and liquidity were not found to be significant explanatory variables of dividend payments. Thus, profitability, earnings volatility and managerial ownership are functioning as the key determinants of cash dividend payments in Bangladesh. Keywords: Bangladesh; Dhaka Stock Exchange (DSE); Dividend Payments; Firm Specific Factor; Listed Companies; Panel Data. 1. Introduction Should a corporation pay dividends to common stockholders? Perhaps the answer of this question mostly depends on the effects of dividend payments on share price of the firm that ultimately yields a concern of dividend payment decisions. It implies payout policy, in which managers decide the size and pattern of cash distribution to shareholders over time. The presence of significant effect of dividend payments on share price has been raised by many theoretical as well as empirical researches done by Lintner (1956), Gordon (1959), Pradhan (2003), Ho (2003), Myers & Bacon (2004), Pani (2008), and Khan et al. (2011). On the other hand, Miller and Modigliani (1961) are the first advocates of proving that dividends are irrelevant and insignificant factor in maximizing firm‟s value under the assumptions of perfect and efficient markets. In addition to Miller and Modigliani (1961), insignificant influence of the dividend on equity share price was also found in the study of Black and Scholes (1974), Uddin & Chowdhury (2005), and Adesola & Okwong (2009). Thus the statement given by Black (1976) in his _________________________________________________________________________________ *Assistant Professor, Department of Business Administration, Northern University Bangladesh, Dhaka E-mail: faruk_par_fin@yahoo.com ** Senior Lecturer, Department of Business Administration, Northern University Bangladesh, Dhaka E-mail: rashelsheikh@yahoo.com ***Assistant Professor, Department of Business Administration, BGMEA University of Fashion and Technology, Dhaka, Bangladesh, E-mail: smakter2010@gmail.com