The Relationship between Ownership Structure and Dividend Policy: An Empirical Investigation

Faris Nasif AL- Shubiri, Ghassan AL Taleb and Abd AL – Naser AL- Zoued
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Faris Nasif AL- Shubiri: Amman Arab University –Jordan
Ghassan AL Taleb: The World Islamic Sciences University- Jordan
Abd AL – Naser AL- Zoued: The World Islamic Sciences University- Jordan
Authors registered in the RePEc Author Service: faris nasif ALShubiri

REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, 2012, vol. 13, issue 4, 644-657

Abstract: This paper examines the possible association between ownership structure, dividend payout policy. It is also one of the very first examples, which tries to detect any potential association in ownership structure, and well established dividend payout models in context of an emerging market .The present study examines the payout behavior of dividends and the association of ownership structure for Jordanian industrial firms over the period 2005-2009. The results consistently support the potential association between ownership structure and dividend payout policy. The results suggest that ownership structure approach is highly relevant to an understanding of corporate dividends policy in Jordan. More precisely, the results indicate that there is a significantly negative correlation between the institutional ownership and dividend per share, and a significantly negative relationship between the state ownership and the level of dividend distributed to shareholders. The results also indicate that the higher the ownership of the five largest shareholders, the higher the dividend payment. The regression results conducted on five models show a strong effect of the free cash-flow on dividend policy. The empirical evidence about the effect of firm size on the level of dividend shows a negative and significant effect. Larger firms are less likely to pay out dividends. Moreover, those firms with better investment opportunities are more likely to pay dividends and firms with high leverage tend to distribute a lower level of dividends.

Keywords: Dividend policy; ownership structure; Cash dividends. (search for similar items in EconPapers)
JEL-codes: G32 G35 G38 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:rom:rmcimn:v:13:y:2012:i:4:p:644-657

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