DETERMINANTS OF DIVIDEND POLICY IN GCC FIRMS: AN APPLICATION OF PARTIAL LEAST SQUARE METHOD

Download This Article

Abstract

This study focuses on providing empirical evidence on explanation of alternate dividend theories and determinants of payout policies by examining the GCC market. The study explores the financial determinants of the dividend payout policies by examining 646 dividend intensive firms of the GCC. The results suggest that large firms in GCC tends to have larger retained cash flows and tend to have higher dividend intensity. It can be implied that GCC based firms adopt a balanced and cautious approach regarding future growth opportunities as well as the dividend payout policy. Higher the liquidity and profitability signals higher dividend intensity. GCC firms which are liquid and profitable tend to pay more dividends. GCC firms with higher market valuation tend to pay more dividends. Firms with high growth rates of earnings and assets tend to pay less dividends. Firms with high leverage are riskier and risky firms tend to pay less dividends.

Keywords: Dividend Payout, Investment Intensity, Market Valuation, PLS SEM, Residual Theory, Pecking Order Theory, Signaling Theory

How to cite this paper: Kumar, B. R., & Sujit, K. S. (2016). Determinants of dividend policy in GCC firms: an application of partial least square method. Corporate Ownership & Control, 13(3-3), 455-466. https://doi.org/10.22495/cocv13i3c3p4