Abstract
The aim of this study is to review the relationship between dividend and company performance on equity capital markets in Iran, consequently two groups of performance indexes based on economical trend and accounting trend were studied. In this study, library method of collecting information was employed and the numbers of 93 companies whose required information were available were chosen in 6-year-old study (2004 to 2009). This study is correlation based on method and nature and it has been used for correlation and regression tests to research hypothesis test. For performance, evaluation was carried out with two groups of indicators: accounting and economic indicators. The experimental results of study has shown that generally, there is a positive relationship between economic and accounting performance indexes and dividend policy, and that accounting performance indicators also have more explanatory power than economic performance indicators in predicting dividend in Iranian capital market. Key words: Dividend policy, economic value added (EVA), market value added (MVA), operation cash flow (OCF), return on equity (ROE), return on asset (ROA).
Highlights
One of the main objectives of companies is creating value and increasing the wealth of shareholders in long term which will result in desirable performance (Anvari et al, 2004)
The aim of this study is to review the relationship between dividend and company performance on equity capital markets in Iran, two groups of performance indexes based on economical trend and accounting trend were studied
This study examined the relationship between economic value added (EVA), market value added (MVA), operation cash flow (OCF), return on equity (ROE), return on asset (ROA) and dividend with controlling variable: firm size, future growth opportunities, debts maturity, cost of cash opportunity, financial leverage, cash flow ability, growth earning per share, liquidity, cash flow in company, proportion of bank debts to other company’s debts
Summary
One of the main objectives of companies is creating value and increasing the wealth of shareholders in long term which will result in desirable performance (Anvari et al, 2004). The main problem is the reasons for adopting a policy of divided payout (Mehrani et al, 2011). Dividend policies are adopted across countries (LaPorta et al, 2000). It is important to understand the relationship between performance and dividend policy in undeveloped countries with traditional market structure. According to prior studies (Denis and Osobav, 2008; Bahramfar and Mehrani, 2004), in developing countries that have high economical growth, their dividend is lower than countries that have low economical growth; importance of dividend subject is reviewable in two dimensions: (1) In view of micro: to maximize shareholders’ wealth, (2) In view of macro: for economic effectiveness and optimization allocation of recourses in a country (Asif et al, 2011)
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