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The Relationship between Ownership Structure and Dividend Policy: An Empirical Investigation

Author

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  • Faris Nasif AL- SHUBIRI

    (Amman Arab University –Jordan)

  • Ghassan AL TALEB

    (The World Islamic Sciences University- Jordan)

  • Abd AL – Naser AL- ZOUED

    (The World Islamic Sciences University- Jordan)

Abstract

This paper examines the possible association between ownership structure, dividend payout policy. It is also one of the very first examples, which tries to detect any potential association in ownership structure, and well established dividend payout models in context of an emerging market .The present study examines the payout behavior of dividends and the association of ownership structure for Jordanian industrial firms over the period 2005-2009. The results consistently support the potential association between ownership structure and dividend payout policy. The results suggest that ownership structure approach is highly relevant to an understanding of corporate dividends policy in Jordan. More precisely, the results indicate that there is a significantly negative correlation between the institutional ownership and dividend per share, and a significantly negative relationship between the state ownership and the level of dividend distributed to shareholders. The results also indicate that the higher the ownership of the five largest shareholders, the higher the dividend payment. The regression results conducted on five models show a strong effect of the free cash-flow on dividend policy. The empirical evidence about the effect of firm size on the level of dividend shows a negative and significant effect. Larger firms are less likely to pay out dividends. Moreover, those firms with better investment opportunities are more likely to pay dividends and firms with high leverage tend to distribute a lower level of dividends.

Suggested Citation

  • Faris Nasif AL- SHUBIRI & Ghassan AL TALEB & Abd AL – Naser AL- ZOUED, 2012. "The Relationship between Ownership Structure and Dividend Policy: An Empirical Investigation," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(4), pages 644-657, October.
    • Handle: RePEc:rom:rmcimn:v:13:y:2012:i:4:p:644-657
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    References listed on IDEAS

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    2. Dhyaa Abdulrazaq Abduljabar Al-Laban* & Abbas Naser Saadoon Almshabbk & Wissam Abdulkadhum Abdulridha, 2018. "The Role of Dividend Payout in the Determination of the Relationship Between Earnings Before Interest and Tax Cash Flow From Operations, Capital Expenditures and Firm Sustainable Cash Flows: A Case O," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 382-390:5.
    3. Tran Thi Xuan Anh & Le Quoc Tuan, 2019. "The Relationship between Ownership Structure and Dividend Policy: An Application in Vietnam Stock Exchange," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 8, July.
    4. Xuanfeng Zhang & Fu Jia, 2014. "Does Ownership Structure Matter for Dividend Yield? Evidence from the Hong Kong Stock Exchange," Business and Economic Research, Macrothink Institute, vol. 4(2), pages 204-221, December.

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    More about this item

    Keywords

    Dividend policy; ownership structure; Cash dividends.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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