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Dividend behaviour and smoothing new evidence from Jordanian panel data

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  • Basil Al‐Najjar

Abstract

Purpose - The purpose of this paper is to investigate dividend policy decisions in developing countries through studying Jordanian non‐financial firms. It aims to highlight the issue of dividend policy and the behaviour of dividends in Jordan as an emerging market. Design/methodology/approach - The paper examines the dividend policy situation in Jordan and compares the differences between developed markets and the emerging markets in the dividend policy context. It uses previous studies and it also covers the determinants of dividend policy. Findings - The paper finds that the dividend policy in Jordan, as a developing country, is influenced by factors similar to those relating to developed countries such as: leverage ratio, institutional ownership, profitability, business risk, asset structure, growth rate and firm size. Furthermore, the factors affecting the likelihood of paying dividends are similar to those affecting the dividend policy. Finally, the results show that the Lintner model is valid for Jordanian data, and that Jordanian firms have target payout ratios and that they adjust to their target relatively faster than firms in more developed countries. Practical implications - The practical implication of the study is that investors and managers should consider the factors that affect the dividend policy when they make their profit distribution decision. Originality/value - The paper investigates the factors that affect the dividend policy and also consider the behaviour issue of dividend payments.

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  • Basil Al‐Najjar, 2009. "Dividend behaviour and smoothing new evidence from Jordanian panel data," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 26(3), pages 182-197, July.
    • Handle: RePEc:eme:sefpps:v:26:y:2009:i:3:p:182-197
    DOI: 10.1108/10867370910974017
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    References listed on IDEAS

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    1. Richard J. Zeckhauser & John Pound, 1990. "Are Large Shareholders Effective Monitors? An Investigation of Share Ownership and Corporate Performance," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 149-180, National Bureau of Economic Research, Inc.
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    4. Short, Helen & Zhang, Hao & Keasey, Kevin, 2002. "The link between dividend policy and institutional ownership," Journal of Corporate Finance, Elsevier, vol. 8(2), pages 105-122, March.
    5. Gul, Ferdinand A & Kealey, Burch T, 1999. "Chaebol, Investment Opportunity Set and Corporate Debt and Dividend Policies of Korean Companies," Review of Quantitative Finance and Accounting, Springer, vol. 13(4), pages 401-416, December.
    6. Mohammed Omran & John Pointon, 2004. "Dividend Policy, Trading Characteristics And Share Prices: Empirical Evidence From Egyptian Firms," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 121-133.
    7. Paul D Koch & Catherine Shenoy, 1999. "The Information Content of Dividend and Capital Structure Policies," Financial Management, Financial Management Association, vol. 28(4), Winter.
    8. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411-411.
    9. Jensen, Gerald R. & Solberg, Donald P. & Zorn, Thomas S., 1992. "Simultaneous Determination of Insider Ownership, Debt, and Dividend Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(2), pages 247-263, June.
    10. Varouj Aivazian & Laurence Booth & Sean Cleary, 2003. "Do Emerging Market Firms Follow Different Dividend Policies From U.S. Firms?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 26(3), pages 371-387, September.
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    Cited by:

    1. Faruk Bostanci & Eyup Kadioglu & Guven Sayilgan, 2018. "Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market," IJFS, MDPI, vol. 6(4), pages 1-16, November.
    2. Kartal Demirg ne, 2015. "Determinants of Target Dividend Payout Ratio: A Panel Autoregressive Distributed Lag Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 418-426.
    3. Basil Al-Najjar & Yacine Belghitar, 2012. "The information content of cashflows in the context of dividend smoothing," Economic Issues Journal Articles, Economic Issues, vol. 17(2), pages 57-70, September.
    4. Ahmed Arif & Mehwish Aziz Khan & Ferheen Kayani & Syed Zulfiqar Ali Shah, 2011. "Dividend Policy and Earnings Management: An Empirical Study of Pakistani Listed Companies," Information Management and Business Review, AMH International, vol. 3(2), pages 68-77.
    5. Geetanjali Pinto & Shailesh Rastogi, 2019. "Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market," JRFM, MDPI, vol. 12(3), pages 1-18, June.
    6. Rehab khan & Jamshad Khurshid Meer & Rab Nawaz Lodhi & Faisal Aftab, 2017. "Determinants Of Dividend Payout Ratio: A Study Of Kse Manufacturing Firms In Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 13(1), pages 13-12.
    7. Erhan Kilincarslan, 2018. "The Factors Determining the Dividend Policy of Financial Firms Listed on the Borsa Istanbul," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 32(1), pages 75-109.
    8. Rehab khan & Jamshad Khurshid Meer & Rab Nawaz Lodhi & Faisal Aftab, 2017. "Determinants Of Dividend Payout Ratio: A Study Of Kse Manufacturing Firms In Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 13(1), pages 12-24.
    9. Fernau, Erik & Hirsch, Stefan, 2019. "What drives dividend smoothing? A meta regression analysis of the Lintner model," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 255-273.

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