Dividend behaviour and smoothing new evidence from Jordanian panel data
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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Volume (Year): 26 (2009)
Issue (Month): 3 (August)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul D Koch & Catherine Shenoy, 1999. "The Information Content of Dividend and Capital Structure Policies," Financial Management, Financial Management Association, vol. 28(4), Winter.
- 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.
- Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- 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.
- 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.
- 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.
- 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(02), pages 247-263, June.
- Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
- 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 401-16, December.
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