Impact of IAS 7 Cash Flow Disclosure on Dividend Policy of Multinational Corporations Listed on the Rwanda Stock Exchange (2015–2024)

Abstract

Background: The increasing adoption of International Financial Reporting Standards has reshaped corporate financial disclosure practices in emerging and frontier economies. Among these standards, IAS 7 requires detailed reporting of cash flow activities, which may influence corporate payout behavior. Objective: This study investigates the relationship between cash flow disclosure under IAS 7 and dividend payout patterns among multinational corporations listed on the Rwandan Stock Exchange from 2015 to 2024. Methods: Panel data obtained from eight listed firms were analyzed using a firm-level fixed-effects model. Cash flow components were examined alongside profitability, leverage, and firm size. A mediation framework was applied to evaluate whether profitability serves as a transmission channel between operating cash flow and dividend payouts. Results: Firms with stronger operating cash generation tend to report higher dividend distributions; however, this relationship diminishes once profitability is incorporated, indicating an indirect pathway. Investment-related cash outflows correspond with lower payout ratios, while financing cash flows show limited statistical relevance. Conclusion: The findings indicate that dividend practices in Rwanda are associated with both liquidity conditions and earnings performance. Enhanced cash flow disclosure appears linked to payout decisions grounded in observable financial fundamentals.