Dividend policy of firms listed on Casablanca Stock Exchange: a panel data analysis

Abstract

This study attempts to identify the main determinants of dividend policy and evaluate the theories that better explain the dividend behaviour of Moroccan listed firms. Data consists of all non-financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2015. This study employed panel data analysis to demonstrate that current profits, financial leverage, growth, liquidity, free cash flow, institutional stock holdings and economic conjuncture represent the main determinants of dividend policy of Moroccan listed firms. The results reveal that the level of expected earnings and past dividend patterns does not influence dividend policy. The findings offer analysts, investors and academicians a valuable tool to understand how CFOs, CEOs, and board of directors design dividend policy. Moreover, given the severity of agency problems in CSE and the role of dividend policy in reducing agency problems, understanding the factors influencing dividend policy is fundamental for investors trading in this market.