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On the dividend smoothing, signaling and the global financial crisis

Author

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  • Al-Malkawi, Husam-Aldin Nizar
  • Bhatti, M. Ishaq
  • Magableh, Sohail I.

Abstract

This paper addresses twin problems related to dividend smoothing and signaling. Firstly, it provides direct test for dividend smoothing and signaling. Secondly, this paper attempts to examine the impact of Global Financial Crisis (GFC) on dividend stability. The paper estimates the Lintner model by incorporating Tobit structure using ten years longitudinal data of firms listed on the Muscat Securities Market. An empirical case study is conducted to demonstrate the usefulness of the model. Our empirical results validate both the original and the modified Lintner model, which is consistent with the signaling hypothesis. The paper finds that the impact of GFC on dividend policy is insignificant. Moreover, the evidence lends support to the substitute model of agency costs theory.

Suggested Citation

  • Al-Malkawi, Husam-Aldin Nizar & Bhatti, M. Ishaq & Magableh, Sohail I., 2014. "On the dividend smoothing, signaling and the global financial crisis," Economic Modelling, Elsevier, vol. 42(C), pages 159-165.
  • Handle: RePEc:eee:ecmode:v:42:y:2014:i:c:p:159-165
    DOI: 10.1016/j.econmod.2014.06.007
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    References listed on IDEAS

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    Cited by:

    1. Douch, Mohamed & Farooq, Omar & Bouaddi, Mohammed, 2015. "Stock price synchronicity and tails of return distribution," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 37(C), pages 1-11.
    2. Brown, Sarah & Greene, William H. & Harris, Mark N. & Taylor, Karl, 2015. "An inverse hyperbolic sine heteroskedastic latent class panel tobit model: An application to modelling charitable donations," Economic Modelling, Elsevier, vol. 50(C), pages 228-236.
    3. repec:eee:ecmode:v:64:y:2017:i:c:p:502-512 is not listed on IDEAS
    4. repec:eee:ecmode:v:75:y:2018:i:c:p:336-354 is not listed on IDEAS
    5. repec:eee:finana:v:61:y:2019:i:c:p:255-273 is not listed on IDEAS
    6. repec:eee:ecmode:v:66:y:2017:i:c:p:244-257 is not listed on IDEAS

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