DIVIDEND POLICY IN SAUDI ARABIA

Dialdin Osman and Elsaudi Mohammed

The International Journal of Business and Finance Research, 2010, vol. 4, issue 1, 99-113

Abstract: We examine dividend policy in a unique environment in Saudi Arabia, where (1) firms distribute almost 100% of their profits in dividends, (2) firms are highly levered mainly through bank loans, and (3) there are no income or capital gains taxes. Some common factors that affect dividend policy of both financial and non-financial firms, we found some factors that affect only non-financial firms. In particular, the common factors are profitability, size, and business risk. Government ownership, lavergae, and age have a significant impact on the dividend policy of non-financial firms but no effect on financial firms. Our results also show that agency costs are not a critical driver of dividend policy of Saudi firms. We also find that the factors that influence the probability to pay dividends are the same factors that drive the amount of dividends paid for both financial and non-financial firms.

Keywords: Dividends; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: G35 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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