4.2 Correlation Analysis
Table 4 provides the Pearson’s correlation matrix for the variables used in the analysis. The results show that the signs of
correlation coefficients between the dependent variable and most independent variables are generally consistent with the
predicted sign by the free cash flow and life-cycle hypotheses. Specifically, there are significant positive correlations
between dividend payout ratio and retained earnings to equity and firm size; a negative correlation between dividend
payout ratio and market-to-book ratio; and significant positive correlations between dividend yield and ROA, retained
earnings to equity, and firm size. In contrast with the free cash flow and life-cycle hypotheses, however, the results
indicate positive correlations between dividend yield and asset growth rate and market-to-book ratio. Further, dividend
payouts, both dividend payout ratio and dividend yield, and leverage are positively correlated at 1% significance level,
an issue that might be distinct for Thai capital market.