Firm-Specific Factors Affecting Dividend Policy of Selected BSE Listed Oil and Gas Companies of India

The dividend policy of an organization is one of the most crucial financial decisions related to the distribution of the profits earned by the firm in the form of payment of dividends to its shareholders and retention of profits for further investment. The decision becomes more crucial in the Oil & Gas industry as these organizations operate in the capital-intensive environment and need sufficient finances for exploration, refining, transportation, distribution, investment in infrastructure and developing emerging energy sectors. The research work analyzes the impact of firm-specific variables on the dividend policies of some selected BSE-listed firms in the Oil & Gas industry in India. Six firms have been selected for this purpose including Oil and Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), GAIL (India) Limited and Reliance Industries Limited for the years FY 2020–21 to FY 2025–26. Secondary data has been used for this research work which includes annual reports of the selected firms. Dividend payout ratio (DPR) has been used as the variable of dividend policy and profitability, financial leverage, liquidity, firm size and capital expenditure as firm-specific variables. The measures for profitability are represented by the ROCE, the debt level by Debt-to-Equity Ratio, liquidity by Current Ratio, firm size by natural log of total assets, and the capital expenditure by the ratio of capital expenditure to total assets. Descriptive Statistics, Trend Analysis, Correlation Analysis, and Panel Data Regression are used in order to analyze the dividend payout trend and the impact of the dividend policy on the above-mentioned firm specific variables. The Oil and Gas sector is chosen due to high capital intensity of the sector and significant investment needs as well as the necessity to maintain a balance between payouts to the owners and investments into the growth of the company.