The Effect of Dividend Policy on the Market Value of the Jordanian Commercial and Islamic Banks Listed on the Amman Stock Exchange

Naseem Abu Roman

doi:10.5539/mas.v13n8p40

Abstract

This study aims at examining the effect of Dividend Policy on the market value of Jordanian commercial and Islamic banks. The study population consists of all Jordanian banks listed on the Amman Stock Exchange during the period from 2008 &ndash; 2018. Data were collected from the annual reports of the sample banks. After the data collection, they were analyzed using descriptive analysis, correlation analysis, and multiple regression analysis.  The results showed a statistically significant impact of dividend policy, this result indicates that there is an impact of the dividend policy on the market value of Jordanian commercial and Islamic banks listed on the ASE during the period 2008-2018. The results also showed a difference between the companies in terms of dividend policy followed, in addition, asymmetry in the Dividend Policy in banks during the study period. The study recommended a number of recommendations, including that manager of firms, should develop effective dividend payout policies to ensure that their firms pay out dividends to enhance the value of their companies and plan an efficient and reliable dividend policy, to suit the wishes of investors, and to engage stakeholders in a dialogue on dividend policy.

Highlights

The maximization of shareholder wealth is one of the most important objectives of companies by maximizing their value
The results showed a statistically significant impact of dividend policy, this result indicates that there is an impact of the dividend policy on the market value of Jordanian commercial and Islamic banks listed on the ASE during the period 2008-2018
(D-W = 1.796) indicates there is no serial correlation, where Durbin-Watson value nearby (2) indicate there is no serial correlation between error terms. This result indicates the impact of the dividend policy on the market value of Jordanian commercial banks listed on the Amman Stock Exchange during the period 2008-2018

Summary

Introduction

The maximization of shareholder wealth is one of the most important objectives of companies by maximizing their value. Dividends provide tangible and tangible evidence of the company's profitability and ability to finance itself and provide real evidence of the company's ability to get cash from its operational activities. That the company will resort to another source of cash such as issuing new shares or borrowing to finance new projects. The examination of the relationship between the dividend policy and the concentration of ownership with the performance of Jordanian financial companies is itself important for the current study because there are differences between the environment in which most of the previous studies and the working environment of Jordanian financial companies in terms of market efficiency and the size of information available to researchers, , And the size of the financial and accounting disclosure in the annual reports. This study will attempt to cover the last ten years to test the relationship between the dividend policy and the performance of Jordanian financial companies

Objectives

Methods

Conclusion