Dividend behaviour and smoothing new evidence from Jordanian panel data

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

Purpose
– The purpose of this paper is to investigate dividend policy decisions in developing countries through studying Jordanian non‐financial firms. It aims to highlight the issue of dividend policy and the behaviour of dividends in Jordan as an emerging market.

Design/methodology/approach
– The paper examines the dividend policy situation in Jordan and compares the differences between developed markets and the emerging markets in the dividend policy context. It uses previous studies and it also covers the determinants of dividend policy.

Findings
– The paper finds that the dividend policy in Jordan, as a developing country, is influenced by factors similar to those relating to developed countries such as: leverage ratio, institutional ownership, profitability, business risk, asset structure, growth rate and firm size. Furthermore, the factors affecting the likelihood of paying dividends are similar to those affecting the dividend policy. Finally, the results show that the Lintner model is valid for Jordanian data, and that Jordanian firms have target payout ratios and that they adjust to their target relatively faster than firms in more developed countries.

Practical implications
– The practical implication of the study is that investors and managers should consider the factors that affect the dividend policy when they make their profit distribution decision.

Originality/value
– The paper investigates the factors that affect the dividend policy and also consider the behaviour issue of dividend payments.
Original languageEnglish
Pages (from-to)182-197
Number of pages16
JournalStudies in Economics and Finance
Volume26
Issue number3
DOIs
Publication statusPublished - 2009
Externally publishedYes

Fingerprint

Smoothing
Dividends
Panel data
Dividend policy
Factors
Jordan
Developing countries
Developed countries
Emerging markets
Design methodology
Payout
Leverage ratio
Profitability
Firm size
Assets
Institutional ownership
Payment
Investors
Managers
Business risk

Cite this

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title = "Dividend behaviour and smoothing new evidence from Jordanian panel data",
abstract = "Purpose– The purpose of this paper is to investigate dividend policy decisions in developing countries through studying Jordanian non‐financial firms. It aims to highlight the issue of dividend policy and the behaviour of dividends in Jordan as an emerging market.Design/methodology/approach– The paper examines the dividend policy situation in Jordan and compares the differences between developed markets and the emerging markets in the dividend policy context. It uses previous studies and it also covers the determinants of dividend policy.Findings– The paper finds that the dividend policy in Jordan, as a developing country, is influenced by factors similar to those relating to developed countries such as: leverage ratio, institutional ownership, profitability, business risk, asset structure, growth rate and firm size. Furthermore, the factors affecting the likelihood of paying dividends are similar to those affecting the dividend policy. Finally, the results show that the Lintner model is valid for Jordanian data, and that Jordanian firms have target payout ratios and that they adjust to their target relatively faster than firms in more developed countries.Practical implications– The practical implication of the study is that investors and managers should consider the factors that affect the dividend policy when they make their profit distribution decision.Originality/value– The paper investigates the factors that affect the dividend policy and also consider the behaviour issue of dividend payments.",
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Dividend behaviour and smoothing new evidence from Jordanian panel data. / Al-Najjar, Basil.

In: Studies in Economics and Finance, Vol. 26, No. 3, 2009, p. 182-197.

Research output: Contribution to journalArticle

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AU - Al-Najjar, Basil

PY - 2009

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AB - Purpose– The purpose of this paper is to investigate dividend policy decisions in developing countries through studying Jordanian non‐financial firms. It aims to highlight the issue of dividend policy and the behaviour of dividends in Jordan as an emerging market.Design/methodology/approach– The paper examines the dividend policy situation in Jordan and compares the differences between developed markets and the emerging markets in the dividend policy context. It uses previous studies and it also covers the determinants of dividend policy.Findings– The paper finds that the dividend policy in Jordan, as a developing country, is influenced by factors similar to those relating to developed countries such as: leverage ratio, institutional ownership, profitability, business risk, asset structure, growth rate and firm size. Furthermore, the factors affecting the likelihood of paying dividends are similar to those affecting the dividend policy. Finally, the results show that the Lintner model is valid for Jordanian data, and that Jordanian firms have target payout ratios and that they adjust to their target relatively faster than firms in more developed countries.Practical implications– The practical implication of the study is that investors and managers should consider the factors that affect the dividend policy when they make their profit distribution decision.Originality/value– The paper investigates the factors that affect the dividend policy and also consider the behaviour issue of dividend payments.

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