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Blockholdings, Dividend Policy, Stock Returns and Return Volatility: Evidence from the UAE

Author

Listed:
  • Umar Butt

    (Finance & Economics Department, College of Business, Zayed University, Dubai P.O. Box 19282, United Arab Emirates)

  • Trevor William Chamberlain

    (DeGroote School of Business, McMaster University, Hamilton, ON L8S 4L8, Canada)

Abstract

This paper examines the relationship between the presence of blockholdings and stock returns and return volatility in the United Arab Emirates. Earlier studies report mixed results for the direction of the relationships across both developed and emerging markets. This study focuses specifically on these relationships in a dividend policy framework. This study further investigates the role of blockholder type by distinguishing between government, individual and corporate blockholders. Our results indicate that blockholder ownership reduces stock return volatility for both non-dividend-paying and dividend-paying stocks, does not impact returns and is not perceived as expropriating the wealth of other investors. We also conclude that the blockholders do not exhibit rent-seeking behavior through the extraction of dividends and investors in UAE firms embrace the role of blockholders and the reinvestment of profits.

Suggested Citation

  • Umar Butt & Trevor William Chamberlain, 2023. "Blockholdings, Dividend Policy, Stock Returns and Return Volatility: Evidence from the UAE," IJFS, MDPI, vol. 11(4), pages 1-13, October.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:4:p:122-:d:1260482
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