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Dividend Policy In Saudi Arabia

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  • Dialdin Osman
  • Elsaudi Mohammed

Abstract

We examine dividend policy in a unique environment in Saudi Arabia, where (1) firms distribute almost 100% of their profits in dividends, (2) firms are highly levered mainly through bank loans, and (3) there are no income or capital gains taxes. Some common factors that affect dividend policy of both financial and non-financial firms, we found some factors that affect only non-financial firms. In particular, the common factors are profitability, size, and business risk. Government ownership, lavergae, and age have a significant impact on the dividend policy of non-financial firms but no effect on financial firms. Our results also show that agency costs are not a critical driver of dividend policy of Saudi firms. We also find that the factors that influence the probability to pay dividends are the same factors that drive the amount of dividends paid for both financial and non-financial firms.

Suggested Citation

  • Dialdin Osman & Elsaudi Mohammed, 2010. "Dividend Policy In Saudi Arabia," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 4(1), pages 99-113.
    • Handle: RePEc:ibf:ijbfre:v:4:y:2010:i:1:p:99-113
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    Cited by:

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    2. Zouhair Boumlik & Badia Oulhadj & Olivier Colot, 2023. "The Effect of the COVID-19 Pandemic on Corporate Dividend Policy of Moroccan Listed Firms," JRFM, MDPI, vol. 16(8), pages 1-17, July.
    3. Fuad Suliman Al-Fasfus, 2020. "Impact of Free Cash Flows on Dividend Pay-Out in Jordanian Banks," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(5), pages 547-558, May.
    4. Pedro Antonio Martin-Cervantes & Salvador Cruz-Rambaud, 2020. "Date-stamping the Tadawul bubble through the SADF and GSADF econometric approaches," Economics Bulletin, AccessEcon, vol. 40(2), pages 1475-1485.
    5. Nor Anis Shafai & Annuar Md. Nassir & Fakarudin Kamarudin & Norhuda Abdul Rahim & Nor Hayati Ahmad, 2019. "Dynamic Panel Model of Dividend Policies: Malaysian Perspective," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(3), September.

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    More about this item

    Keywords

    Dividends; Saudi Arabia;

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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