The Moderating Effects of Dividend Policy on the Impact of Financial Disclosure Towards Corporate Value: A Study of Listed Jordanian Industrial Firms

Yousef Shahwan

doi:10.7176/rjfa/10-6-13

Abstract

This study is primarily designed to examine the moderating effects of dividend policy on the impact of financial statement disclosure towards the corporate value of the Jordanian industrial companies listed in Amman Stock Exchange (ASE). In this study, the unit of analysis consist of 61 industrial firms, which is equivalent to 63% of the total number of Jordanian listed industries in ASE as at 2011. Therefore, secondary data was used, in which the data was collected from the annual financial reports disclosed by the selected industrial firms covering the period of 13 years from 2005 to 2017. Analysis was made through SPSS version 21 and SmartPLS version 3. Accordingly, findings of this study revealed that the total direct effects between the variables were positively significant at p-value 0.05. Moreover, the total contribution of the exogenous variables in the prediction of endogenous variable is 85%. Based on the findings, it is recommended that, Jordanian listed industrial firms should consider a full disclosure of their financial transaction since accountability and transparency attracts potential investors and creditors alike to pick interest in doing business with utmost financial security. It is recommended that the listed industrial firms of Jordanian should be given a maximum consideration to the indicators used in this study since the indicators were perfects to measure the variables under study for a better management decisions. Keywords: Dividend policy, Financial Disclosure, Corporate Value, Management Decisions DOI : 10.7176/RJFA/10-6-13 Publication date :March 31 st 2019

Highlights

In the present day, financial disclosure is one of the key facets of accounting that is playing an unimaginable role among various categories of financial information users
The findings of this study proved the acceptance of hypothesis 2, which states that dividend policy has positive and significant effects on the corporate value of the Jordanian listed industrial firm
The finding of this study have proved that the hypothesis 3, which states that dividend policy has positively and significantly moderate the effect of financial disclosure on the corporate value of the Jordanian listed industrial firms is rejected

Summary

Introduction

Financial disclosure is one of the key facets of accounting that is playing an unimaginable role among various categories of financial information users. These users include both internal (shareholders, employees, managers, board of directors etc) and external (investors, government, customers, and general public) to whom the financial information is communicated in order to draw a sound investment and other financial decisions (Wild, Shaw & Chiappetta, 2009). The disclosed financial information may equipped the users with sufficient information, skills and techniques to compute, analyse and interpret the information so as to understand the financial strength and weaknesses of the organization for them to make a sound and effective decision. Among other advantages of financial disclosure is to ensure proper dissemination of reliable information to the entire stakeholders regarding firm’s value which prevent the managers and directors from cheating them out of their investments (Bushman & Smith, 2003) and led to maximization of corporate value rather than personal interest (Black, 2000)

Objectives

Methods

Conclusion