On the dividend smoothing, signaling and the global financial crisis

Husam-Aldin Nizar Al-Malkawi, Muhammad Bhatti and Sohail I. Magableh

Economic Modelling, 2014, vol. 42, issue C, 159-165

Abstract: This paper addresses twin problems related to dividend smoothing and signaling. Firstly, it provides direct test for dividend smoothing and signaling. Secondly, this paper attempts to examine the impact of Global Financial Crisis (GFC) on dividend stability. The paper estimates the Lintner model by incorporating Tobit structure using ten years longitudinal data of firms listed on the Muscat Securities Market. An empirical case study is conducted to demonstrate the usefulness of the model. Our empirical results validate both the original and the modified Lintner model, which is consistent with the signaling hypothesis. The paper finds that the impact of GFC on dividend policy is insignificant. Moreover, the evidence lends support to the substitute model of agency costs theory.

Keywords: Dividend smoothing; Signaling; Lintner model; Panel data; Tobit model; Global financial crisis; Muscat Securities Market (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:42:y:2014:i:c:p:159-165

DOI: 10.1016/j.econmod.2014.06.007

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