Ownership structure, firm-specific factors and payout policy: Evidence from the GCC region

Abstract

This paper draws on the author’s previously published works. The purpose of this study is to examine the effect of ownership structure and firm-specific factors on the payout policy of firms listed on the largest stock market in the Gulf Cooperation Council (GCC) region namely the Saudi Stock Exchange (SSE). The paper uses a balanced panel dataset of 69 nonfinancial companies (552 firm-year observations) and employs the random effects Tobit specification. The results show that government, institutional and family ownership positively influence dividend payments in Saudi Arabia. Furthermore, dividend payments are positively associated with firm-specific factors such as profitability, firm size and firm maturity but negatively related to business risk and leverage. The findings are consistent with the agency costs and reputation hypotheses. The paper provides some practical implications for the Capital Market Authority of Saudi Arabia (CMA), corporations and investors