Dividend Policy of Jordanian Firms: Stability Tests and Survey Results

Hadeel Yaseen,Bashar Abu Khalaf,Ghassan Omet

doi:10.5539/ibr.v8n8p72

Hadeel Yaseen, Bashar Abu Khalaf + Show 1 more

Open Access

https://doi.org/10.5539/ibr.v8n8p72

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Abstract

The aim of this study is to examine listed Jordanian firms in terms of the issue of dividend policy stability. In more specific terms, the paper complements the econometric analysis of dividend stability with a survey of the Chief Financial officers (CFOs). Based on a total of 40 industrial firms and the time period 2002-2013, the results of the panel data analysis indicate that Jordanian firms follow stable dividend policy. In addition, the survey results support the econometric conclusions. Based on the results of this paper, it is recommended that future research should examine the issue of what really determines the dividend policy of Jordanian firms. In addition, given the fact that the industrial firms follow stable dividend policy, it would be extremely interesting to investigate whether or not these firms manage earnings in order to meet their dividend stability objective. Highlights: Examining listed Jordanian industrial firms in terms of if the firms adopt stable dividend policy?The results reveal that the sample of firms do follow stable dividend policy Do Chief Financial officers’ (CFOs) views on dividend policy support or contradict the actual behaviour of dividend policy?

Highlights

Standard textbooks teach students that the subject matter of corporate finance deals with three long-term financial decisions
The results reveal that the sample of firms do follow stable dividend policy Do Chief Financial officers’ (CFOs) views on dividend policy support or contradict the actual behaviour of dividend policy?
This paper examined a total of 40 listed Jordanian industrial firms in terms of the stability issue of their dividend policy

Summary

Introduction

Standard textbooks teach students that the subject matter of corporate finance deals with three long-term financial decisions. To give answers to the above-mentioned financial decisions, corporate finance has developed a myriad of concepts and techniques to help financial managers in the process of maximizing firms’ stock prices These include, for example, capital budgeting techniques, optimal capital structure, cost of equity capital, the weighted average cost of capital, and many others. Irrespective which argument is more relevant, it is interesting to note that the “empirical evidence on whether dividend policy affects a firm’s value offers contradictory advice to corporate managers” (Baker et al, 2011). These contrasting views have led to the publication of many papers that examine dividend policy.

Literature Review

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Summary and Conclusions