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POSLOVNA IZVRSNOST ZAGREB, GOD. IV (2010) BR. 1 Morandi M., Salehi M., Honarmand S.: Factors affecting divident policy...

FACTORS AFFECTING DIVIDEND POLICY:EMPIRICAL EVIDENCE OF IRAN

Mehdi Moradi 1, Mahdi Salehi 2&Shahnaz Honarmand3

UDK/UDC:336.76(55)JEL classification / JEL klasifikacija: G

12

Preliminary communication / Prethodno priopenjeReceived/Primljeno: October 10, 2009 / 10. listopad 2009Accepted or publishing/Prihvaeno za tisak: June 15, 2010 / 15. lipnja 2010.

Summary

Dividend policy involves extremely important financial decisions which serve as abasis of numerous theories. However, these theories have been developed in different fields,and according to some evidence this policy remains a kind of dilemma in the financial

cycles of corporations. Tus we deal with them as one of the ten most crucial problemsof corporations. Te aim of this study is to elaborate a model which would enable us toexamine the effects of dividends in relation to profitability, size, beta rate, the rate of re-tained earning, P/E, and debt ratio. In other words, our aim is to find an answer to thisquestion: Do these above mentioned factors affect the dividend policy in Iran or not? Tisresearch covers all listed companies in the ehran Stock Exchange between 2000 and 2008.According to the results of the study there is a direct relationship between dividend andprofitability. However, the results also reveal that there is a reverse relationship of thesefactors with P/E, beta rate and debt ratio. Furthermore, the results of the study show thatthere is no meaningful relationship between the dividend policy and a companys size andrate of retained earning.

Key words: dividend policy, size, beta rate, retained earning, P/E.

1 Mahdi Moradi, Assistant Proessor, Faculty o Economics and Administrative Sciencies, Ferdowsi Univer-

sity o Mashhad, Iran, E-mail: [email protected] Mahdi Salehi, Assistant Proessor, Faculty o Economics and Administrative Sciences, Ferdowsi Univer-

sity o Mashhad, Iran, E-mail:[email protected] Shahnaz Honarmand, Master o Financial Management, Al-Zahra University, eheran, Iran

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1. INTRODUCTION

Corporate dividend policy has long been an issue o interest in the financial

literature and, despite the vast research on the topic, it remains an open subject. Eversince the work o John Lintner (1956), ollowed by the work o Miller and Modigliani(1961), dividend policy remains a controversial issue. In act, this has been true sinceMiller and Modiglianis (1961) irrelevance proposition, according to which dividendpolicies are all equivalent and there is no particular policy that can increase sharehold-ers wealth in perect capital markets.

Firms can use internal or external sources to finance their investments. Internalsources include retained earnings and depreciation, while external sources basicallyreer to new borrowings or the issue o stock. Tus the financing decision involvesthe appraisal o two choices. Te first is the dividend choice the raction o retainedearnings to be ploughed back and the raction to be paid out as dividends. Te secondis the capital structure choice the raction o external finance to be borrowed and theraction to be raised in the orm o new equity. Firms are generally ree to select thelevel o dividend they wish to pay to holders o ordinary shares, although actors suchas legal requirements, debt covenants and the availability o cash resources imposelimitations on this decision. It is thus not surprising that the empirical literature hasrecorded systematic variations in dividend behavior across firms, countries, time andtype o dividend.

One o the most critical arguments o financial literature has been dividend

policy. Dividend has two important aspects. First, it is an effective element o corpora-tions investment. On the one hand, the higher the dividend paid out, the lower will becorporations internal resources or perorming investment projects, while outsourcingrequirement will increase which is an effective element o the stock price. On the otherhand, many corporate shareholders demand cash dividends (Salehi and Biglar, 2009).Tus, managers should always equilibrate between different interests o shareholdersso that they could utilize investment profitable opportunities and would pay requiredcash dividends or some shareholders (Salehi and Rostami, 2009). Tereore, a dividenddecision by corporations managers is very sensitive and important as well. Tere is nodoubt that when deciding about income, managers should consider their outcomes.

Tis is why many corporations have a certain purpose in mind while making decisionsabout dividends. However, it is without question that when managers make dividenddecisions they inevitably ace constraints such as liquidity problems, tax considerationsand so on. Listed corporations in the stock exchange use different advertising instru-ments or internal and external investment. One o these financial instruments is thedividend. On the one hand, dividends will provide a stable income or shareholderswho are able to regulate their lie expenses with it, and on the other hand investorsand stock buyers will pay attention to corporations annual stock dividend news andreports. Tey will give due attention to the act that dividend represents corporationspower, while profit payment will cause shareholders to have confidence in their yield ocapital receipt. Tereore, it is important to understand the actors that affect dividendpolicies and the managers making decisions about dividend policies in terms o theseactors.

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Te rest o this paper reviews prior studies on this subject, explains the researchmethodology in the next section, discusses the results o the research and makes con-clusions on the basis o results.

2. DIVIDEND POLICY

Lintner (1956) suggests that dividend depends in part on the firms current earn-ings and in part on the dividend or the previous year. He finds that major changes inearnings with existing dividend rates are the most important determinants o the firmsdividend policy. He also finds that firms tend to make periodic partial adjustmentstoward a target payout ratio rather than dramatic changes in payout. Fama and Babiak(1968) support Lintners argument that managers increase dividends only afer they

are reasonably sure that they can permanently maintain them at the new level. Millerand Modigliani (MM, 1961)) suggest that, in a world without taxes, transaction costs,or other market imperections, dividend policy is irrelevant to the value o the firm.Tey also suggest that dividend is determined residually; this means that dividends arepaid rom the money lef afer investing in positive NPV projects. However, the clien-tele-effect on dividends is an example o actors that speak in avor o the relevanceo dividends to the value o the firm. Tere are several empirical studies (Kwan, 1981;Eades, 1982; Asquith & Mullins, 1983; and Baker et al, 1985) that suggest that dividendchanges convey signals to the market about the uture o the firm. Other research pa-pers (e.g. Elton & Gruber. 1970; Pettit, 1977; and Baker et al, 1985) acknowledge the

existence o clientele-effect on dividends.

An essential assumption o MMs dividend irrelevance theory is that investorsand managers have identical inormation with regard to the companys uture earningsand dividend. In reality, however, managers have better inormation about uture pros-pects than investors. Empirical studies have observed that an increase in dividend leadsto an increase in share price, while a decrease in dividend leads to a decrease in theprice. MM also observed that companies are hesitant towards a decrease in dividendsand do not increase dividends unless they expect better uture earnings. Tereore,they argue that an increase in dividends is a signal to investors that the companys

management predicts better earnings in the uture and that a decrease in dividendis a signal o poor earnings in the uture. Tereore, investors might be attracted bythe signal conveyed about uture profits rather than the high rates o dividend payout(Brealey and Myers, 2000). Empirical studies o signaling have had mixed results inproving whether share price changes ollowing an increase or a decrease in dividendsreflect only a signaling effect, dividend preerence, or both. Tere is, however, a generalagreement in the literature that signaling is a value-relevant determinant o dividendpolicy. Motives or signaling include actions to indicate uture profits, actions to getexternal finance, actions to help prevent a takeover, and complying with and adoptinga policy o a parent company that wants to signal certain inormation. Te literaturealso recognizes the act that groups o investors have an incentive to pursue low-pay-out stocks, while other groups have an incentive to pursue high payout stocks. Tesegroups are called clienteles. Te clientele-effect argument states that dividend policy

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responds to the needs o stockholders. MM and several studies suggest that there isin act a clientele-effect (Pettit 1977), which is also a value-relevant determinant odividend policy.

3. REVIEW OF RELATED LITERATURE

Te stock exchange is a market that makes capital and it is used or dispersedcapital concentration and while it serves the aims o corporation development.

Te stock exchange is one o important dimensions o capital distribution in acountrys economy and indeed it is an organization that relates between peoples de-posits and investment opportunities in a society.

So ar, a lot o research has been done on dividends. Te aims o these studieswere to determine the characteristics that corporations deal with to pay income. Rozeff(1982) investigated the dividend policies and their relation with variables such as betarate, growth rate, and management ownership ratio in USA. He collected the data rom1000 firms in 64 different industries by using published articles in the field o invest-ment evaluation by value line institution rom June 1981. Te results showed that divi-dend payment is a reverse unction o uture growth in sales, beta rate, and corpora-tions management ownership ratio. However, dividend payment has a direct relation-ship with the number o shareholders. Furthermore, the results o this study showedthat corporations investment policies affect the dividend policy. In 1992, Jensen et al

studied U.S corporations. Tey concluded that debt ratio has a reverse relationshipwith the dividend payment ratio, so that the higher the debt ratio, the higher is thefinancial risk and lower the dividend distribution.

Afer 1978, the dividend percentage reduced dramatically in the US corpora-tions. It reduced rom 52.8% in 1973 to 20% in 1999. Tis motivated Fama and French(2001) to examine the reasons or dividend reduction o listed corporations in the NewYork Stock Exchange. Results revealed that profitability, firm size, and investment op-portunities were the main actors influencing dividends. Furthermore, the results alsoshowed that big size corporations paid higher dividends. However, corporations with

lower investments opportunities paid low dividends. According to results o Stiglitz(1973), beore firms reach their effi cient size (maturity) they do not distribute divi-dends. Tis is why larger firms distribute dividends.

Pandy (2001) investigated the dividend payment behavior in Malaysia. Teresearch sample included 248 listed corporations in the period rom 1993 to 2000.Tis sample included building industries, consumer products, industrial products, ag-ricultural products, real estate, and service enterprises. Results showed that dividendpayment ratios among different industries are different in Malaysia. Agricultural andconsumer product corporations had the highest level o dividend payment, becausethey had limited investment opportunities and more working capital. Te results alsoindicated that profitability, firms size and investment opportunities affect dividendpayments. Tese results also suggested that larger and more profitable companies payhigher dividends. However, firms with profitable opportunities pay ewer dividends.

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than English (UK) corporations. Also, dividend payment ratio changed dramaticallyduring these years and in some years corporations did not pay dividends. Results alsoindicated that in German firms the speed o dividend adjustment and dividend pay-

ment ratios are based on cash flows. Tis is because cash flows have more importancethan revenues. Tese results suggest that correlations between issued revenues aremore pronounced than those o cash flows. Another result o this research was that USand UK firms adjusted their dividend policy slowly, while German firms tended to stopdividend payment when in conditions o reduced profitability.

Beabczuk (2004) investigated dividend policies in Argentina. His goal was toinvestigate deterministic elements in dividend policies o listed corporations in theArgentina Exchange during 1996-2002. Research results indicated that larger and moreprofitable firms without good investment opportunities paid more dividends. Mean-

while, corporations with higher risk and borrowing paid ewer dividends.Shulian and Yanhong (2005) investigated diffi culties in dividend payments in

Chinese corporations. Te sample included listed corporations in Shanghai Exchangeby the end o 2000. In total 299 corporations were chosen randomly. Results o thestudy revealed that dividend payments in Chinese corporations had a direct relation-ship with current yield per share and total assets, and a reverse relationship with debtratio. On the other hand, cash dividend payment had a direct relationship with operat-ing cash flows. Results also indicated that firms with higher rate o return on invest-ment and ree cash flow paid higher dividends and belonged to traditional industries.

Firms with higher rate o return on investment and lower ree cash flow paid lowerdividends and belonged to modern industries with developed technology.

Te results o the studies o Eije and Megginson (2006); and Ferri, Sen, and Yui(2006) showed the differences that in terms o dividend payment between Americanfirms and non-American firms. On the one hand, results o Eije and Megginson (2006)revealed that in the European countries accumulated dividends affect dividend pay-ment.

Sharma and Singh (2006) examined deterministic actors o stock price in In-dian corporations. Tey studied 160 firm samples during 2001-2005. Results indicated

that revenue and book value per share and dividends are important and effective ac-tors in determining stock price and that they signaled the financial health o corpora-tions. Tereore, corporations need to adopt an expansible policy in dividend distribu-tion, because high dividend ratio is effective in increasing market value per share.

Kowalewski and Oleksandr (2007) investigated dividend policy and corporategovernance in Poland. Tey examined 110 non-financial corporations between 1998and 2004. Te result o the study revealed that corporate governance is an importantdeterminant o dividend policy. Also, larger corporations with higher profitability thatdont have good investment opportunities paid more dividends. Also, corporations

with higher debt ratio paid ewer dividends.Al-Malkawi (2007) examined the determinants o corporate dividend policy

in Jordan. He used a firm-level panel that consisted o all publicly traded firms on the

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Amman Stock Exchange between 1989 and 2000. Te results suggest that the pro-portion o stocks held by insiders and the state significantly affected the amount odividends paid. Size, age, and profitability o the firm seem to be determinant actors

o corporate dividend policy in Jordan. Te findings provide strong support or theagency costs hypothesis and are broadly consistent with the pecking order hypothesis.Te results provide no support or the signaling hypothesis.

Raablle and Hedensted (2008) concluded that Danish corporations that paydividend have the ollowing characteristics: high return on owners equity and accu-mulated dividend, low market, book value ratio, large firm size and dividend distribu-tion in the previous year.

Al-Kuwari (2009) investigates the determinants o dividend policies or firmslisted on Gul Cooperation Council (GCC) country stock exchanges. Tis is a case

study o emerging stock exchanges, where the determinants o dividend policy havereceived little attention. Tis study used a panel data consisting o non-financial firmslisted on the GCC country stock exchanges between the years o 1999 and 2003. Sevenhypotheses pertaining to agency cost theory were investigated using a series o randomeffect obit models. Te models considered the impact o government ownership, reecash flow, firm size, growth rate, growth opportunity, business risk, and firm profit-ability on dividend payout ratios. Te results suggested that the main characteristics ofirm dividend payout policy were that dividend payments related strongly and directlyto government ownership, firm size and firm profitability, but negatively to the lever-age ratio. Tese results, taken as a whole, indicate that firms pay dividends with the

intention o reducing the agency problem and maintaining firm reputation, since thelegal protection or outside shareholders was limited. In addition, and as a result o thesignificant agency conflicts interacting with the need to built firm reputation, a firmsdividend policy was ound to depend heavily on firm profitability. Tis may indicatethat listed firms in GCC countries alter their dividend policies requently and do notadopt a long-run target dividend policy.

A study was conducted by Fadaeinejhad (2005) in Iran by investigating the e-ect o B/M ratio and firm size on profitability o corporations. Te result o the studysuggested that there is a reverse linear relationship between B/M ratio and profitability.

Also, results indicated that the return on owners equity had no significant relationshipwith the firm size and that it could not be expected its profitability regarding to uturefirm size.

4. RESEARCH METHODOLOGY

Black (1976) epitomizes the lack o consensus by stating that Te harder we lookat the dividend picture, the more it seems like a puzzle, with pieces that dont fit together. Because the academic community has been unable to provide clear guidance aboutdividend policies due to the ocus on financial data and statements o companies, manypapers shifed their emphasis (e.g Baker et al 1985, and Partington 1985). Te lack oconsensus with regard to dividend policy in general, and dividend determinants inparticular, is real. When the analysis o numbers and data does not add much to our

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understanding o this area, analyzing the decision-makers perceptions becomes im-portant.

Te statistical sample o the study includes listed corporations in the ehranStock Exchange (SE) during the period between 2000 and 2008. otally 73 corpora-tions were randomly chosen as samples rom different industries.

Tis research has used historical inormation and special statistical methods(multiple regressions) to examine the relationship between variables and to test the hy-potheses. Required inormation was collected through different journals and reports.Regression analysis methods were used to analyze the statistical tests. In addition, SPSSsofware was used to process inormation.

Research variables

Used variables and their calculation method are as ollows:

1 - Firm size: logarithm o issued stock market value is considered as the firm size;

2 - Beta: Beta is obtained rom the ollowing ormula: B = COV (return on per shareand return on market) / market variance;

3 - Per share price / earning ratio by dividing per share price / earning in each year;

4 - Debt/ equity ratio: total debt o corporation divided by total corporation stockmarket value at the end o each financial year;

5 - Profitability coeffi cient: otal firm revenue beore return divided by the total valueo a firms assets;

6 - Growth o accumulated earning: Difference amounts o accumulated earning dur-ing two subsequent financial periods divided by beginning accumulated earningamounts;

7 - Percentage o dividend distribution: distributed dividend percent in each firm havebeen extracted by different sofware.

5. RESEARCH HYPOTHESES

By reviewing literature and research variables, the ollowing hypotheses werepostulated in the study.

1 - Tere is a reverse and significant relationship between Beta rate and dividend pay-ment ratio.

2 - Tere is a direct and significant relationship between firm size and dividend pay-

ment ratio.3 - Tere is a direct and significant relationship between per share price, earning ratio

and dividend payment ratio.

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4 - Tere is a reverse and significant relationship between debt, equity ratio and divi-dend payment ratio.

5 - Tere is a reverse and significant relationship between accumulated dividendgrowth rate and dividend payment ratio.

6 - Tere is a direct and significant relationship between profitability ratio and divi-dend payment ratio.

6. TESTING OF HYPOTHESES

Tis part o the study includes testing o hypotheses. As mentioned earlier, thisresearch used historical inormation and special statistical methods (multiple-regres-sion) to examine the relationship between variables and to test the hypotheses.

esting o first hypothesis

H1: Tere is a reverse and significant relationship between beta rate and divi-dend payment ratio.

In terms o the first hypothesis, the ollowing regression equivalent is written:

d= B0 +B1 (beta) + e

Where: d= dividend payment ratio

Bo = fixed amount variable coeffi cient

B1= independent variable coeffi cient

Beta = beta coeffi cient

Tis model was tested and it was determined that it is significant. Also, it wascleared that the fixed rate is not zero.

D= 77.94 - 1.36 (beta).

Table 1: Te results o testing the first hypothesis

Results Fixed amount Coefficient Probability sample Variable

Accepted 77.94 -1.36 0.04 Beta

According to the results, a reverse and significant relationship between beta anddividend distribution percentage was proved with a 90% confidence level.

esting o second hypothesis

H2: Tere is a direct and significant relationship between firm size and dividendpayment ratio.

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Regression ormula is as ollow:

d=Bo+B1 (size)

Where: d: dividend payment ratio

Bo: Fixed amount

B1: independent variable coeffi cient

Size: Firm size

By testing it, it was concluded that this model is not significant. Also, it wasdetermined that the fixed amount is zero. Statistical results o this hypothesis can beseen in able 2.

Table 2: Te results o testing the second hypothesis

Result Fixed amount Coefficient Probability sample Variable

Rejected 92.29 -1.37 0.31 Firm size

Te results indicated that the firms size doesnt have a significant relationshipwith the amount o dividend distribution percentage. Te idea that a firms size anddividend payment are directly related to each other was proved alse. Research resultsare similar to the research results o Fadaeinejhad (2005) by indicating that there is nosignificant relationship between a firms size and the dividend distribution percentage.

A probable reason why a firms size does not affect the distributed dividend per-centage is that in Iran stock market as opposed to oreign stock market firms effi ciencyor dividend distribution is not mandatory.

esting o third hypothesis

H3: Tere is a direct and significant relationship between per share price, earn-

ing ratio, and dividend payment ratio.

Following regression is written: d=B0+B1 (P/E)

Where: d: dividend payment ratio

Bo: fixed amount


P/E: per share price/ earning ratio

Tis model was tested and it was determined that this model was significant andthat the fixed amount is zero. d=82.01-0.87(P/E) +e

Statistical results o the hypothesis are shown in able 3.

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Table 3: Te results o testing the third hypothesis


Rejected 82.01 -0.87 0.000 P/E

Te results revealed that there is a reverse and significant relationship between

per share price earning ratio and dividend distribution percentage.

As a result, the research hypothesis is rejected and null hypothesis is accepted.Tis perhaps suggests corporations uture revenue growth because managers will in-

vest in profitable projects rather than to pay dividends.

esting o ourth hypothesis

H4: Tere is a reverse and significant relationship between debt and equity ratio

with dividend payment ratio.

Regression equivalent or ourth hypothesis is as ollow:

d=B0+B1 (debt) +e

Where: d: Dividend payment ratio

Bo: fixed amount


Beta: debt /equity ratio

In appeared that with regard to dispersion (relationship between debt ratioand dividend distribution percentage), a double relationship o various debt amounts

could be thought. Tis relationship is positive or large debt and negative or smalldebt. o consider this subject, a dummy variable was used. Tis variable is defined

as ollows:

I debt is less than 5.5 then dummy = 0

I debt is more than 5.5 then dummy multiple debt = 1

d=B0+B1 (debt) + g1 (dummy) + g2 (dummy debt)

Tis model was tested and it was determined this model is significant and fixed

amount is not zero.

d=77.53 - 7.68 (dummy) +0.32 (dummy debt)

able 4 illustrates the results o testing the ourth hypothesis.

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Table 4: Te results o testing the ourth hypothesis


Accepted 77.53 -7.68 0.032 dummy

Rejected 77.53 0.32 0.032 Dummy debt

Te results had a double behavior in the relationship between debt ratio anddividend distribution percentage. In the firms with very high debt ratio there is a directand significant relationship between this ratio and dividend distribution percentage,but in the firms with low debt ratio, this relationship is reverse. Tereore, there was noreason to reject the orth hypothesis. However, in the firms with high debt ratio, thishypothesis was rejected.

esting o fifh hypothesis

H5: Tere is a reverse and significant relationship between accumulated divi-dend growth rate and dividend payment ratio.

Regression ormula is as ollows:

Where: d=B0+B1 (g) +e

d: Dividend payment ratio

Bo: fixed amount


g: Accumulated dividend growth rate.

Tis model was tested and it was determined that this model is not significant.Consequently this hypothesis is rejected. Te statistical results o this hypothesis areshown in able 5.

Table 5:Te results o testing the fifh hypothesis


Rejected 77.87 -0.15 0.26 Accumulated dividend growth rate

esting o sixth hypothesis

H6: Tere is a direct and significant relationship between profitability ratio anddividend payment ratio.

Regression ormula is written as ollows:Where: d=B0+B1 (pr) +e


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Bo: fixed amount


Pr: profitability ratio.

Tis model was tested and it was determined that it is significant.

d=72.38+21.88 (profitability)

Statistical results o this hypothesis are shown in able 6.

Table 6: Te results o testing the sixth hypothesis


Accepted 72.38 21.88 0.01 Profitability

Te results indicated that there is a direct and significant relationship betweenprofitability and dividend distribution percentage. Tereore, the sixth hypothesis isconfirmed. Alternatively the null hypothesis is rejected.

6. MULTIPLE REGRESSION

In these section pure effects o each variable is evaluated by multiple regressionskeeping the effect o other variables fixed. Tis model predicts the dividend distribu-tion ratio more exactly.

It is diffi cult to suit time series models and evaluate parameters with a highconfidence, due to short research time periods (8 years). Tus, better evaluation couldbe obtained by data combination. Tese evaluations called on combined evaluation inthe economic issues.

Multiple regression models above are suited in different times to obtain a sig-

nificant model. Afer elimination o independent variables that have no significant re-lationship with dependent variable, the model is written as ollows:

d= B0 + B1 () +B2+B3 (Pr) +B4 (DB) + e


Bo: fixed amount

B1: variable beta coeffi cient

= Beta rateB2= per share pricey earning ratio

B3= profitability ratio coeffi cient

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Pr = profitability ratio

B4= debt ratio coeffi cient

DB= debt ratio

Statistical results are shown in able7.

Table 7:Te results o multiple regressions

Probability Fixed amount Coefficient Variable

0.000 77.27 -1.22 Beta

0.000 77.27 -0.97 P/E

0.000 77.27 22.91 Profitability

0.000 77.27 0.21 Dummy multiple Debt

Finally the model is written as ollows:

d= 77.27- 1.22 () 0.97 (P/E) + 22.91 (Pr) + 0.21 (DB) + e

It appears that by assuming lack o effect o P/E and profitability and debt ratio

variable, adding a unit in beta coeffi cient will reduce dividend distribution percentageby 122%. By assuming lack o effect o P/E debt ratio and beta coeffi cient variables,adding a unit in profitability will increase dividend distribution percentage by 299%.

Finally, by assuming that beta coeffi cient, P/E and profitability variables are fixed,adding a unit in debt ratio will increase dividend distribution percentage by 21%.

7. CONCLUSION

Te conclusions o each hypothesis are as ollows:

First hypothesis: With 90% confidence level, there is a reverse and significantrelationship between beta coeffi cient and dividend distribution percentage.

According to Rozes researchs (1992), firms with higher beta coeffi cient will payewer dividends.

Second hypothesis: Research results indicate that size does not affect dividenddistribution. Tis result is opposed to research results o Fama and French (2000) but itis similar to the research results o Fadaeinejhad (2005) in Iran. Perhaps this is becausein the Iranian stock market, effi ciency o firms in distributing dividends was not man-

datory in the mentioned research period.

Tird hypothesis: one o the key indicators and market principle variables topredict uture market changes by investors and organizations is per share price/ earn-

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ing ratio. It is likely that a reverse relationship between P/E ratios and paid dividendssuggests uture growth in revenues.

Last, but not the least, managers awareness o adopted dividend policies is veryimportant or investors, because they will suffer substantial costs to obtain inormationin this regard. Dividend payment to common shareholders is one o the ways that afirm directly affects shareholders wealth.

As investors are interested in the inormation about dividend policies, manag-ers will tend to predict annual receipt dividend and its distributable percentage so thatthey can collect a cash budget and its investment policies.

1) By assuming lock o effect beta, profitability and debt ratio, adding a unit inP/E ratio will reduce dividend distribution percentage by 97%.

Tereore, it is important to determine deterministic elements in dividends Onthe one hand it will cause the reduction o investor risk in the expected receipt yieldand on the other hand managers will adopt dividend policies with more awareness.

Since the dividend policy affects numerous elements, and since these elementscould be ound by perorming empirical researches in the stock markets with regardto the existing condition on these stock markets, these research results have many ap-plications.

I exchange requirements would be similar to 2000-2008 time periods, it couldbe concluded that beta and price/earning ratio have a reverse and significant and debtratio (its high amounts) and profitability ratio have a direct and significant relationshipwith dividend payment listed corporations in SE.

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INITELJI KOJI UTJEU NA POLITIKU DIVIDENDI:EMPIRIJSKO ISKUSTVO IRANA

Mehdi Moradi 4, Mahdi Salehi 5&Shahnaz Honarmand6

Saetak

Politika dividendi je jedna od najkontroverznijih odluka na kojima se temelje bro-jne teorije. Meutim, te teorije su nastale u brojnim podrujima, te dokazi pokazuju kakoje ova politika i dalje ostaje dilema u financijskim ciklusima korporacija. Stoga se ovimpitanjem bavimo kao jednim od deset kljunih problema korporacija. Cilj ove studije jepredstaviti model koji bi nam omoguio da istraimo uinke dividendi u odnosu na profit-

abilnost, veliinu, stopu Bete, stopu zadrane zarade, stopu PE omjera i omjera duga. Dru-gim rijeima, na je cilj pronai odgovor na ovo pitanje: Da li gore navedeni faktori utjeuna politiku dividendi u Iranu ili ne? Ovo istraivanje ukljuuje sve kompanije uvrtene naeheranskoj burzi u razdoblju 2008. 2009. Prema rezultatima studije, postoji izravnaveza izmeu dividendi i profitabilnosti. Meutim, rezultati takoer otkrivaju da postojiobratna veza ovih faktora s PE omjerom, stopom Bete i omjerom duga. Nadalje, rezultatiove studije pokazuju kako ne postoji znaajna veza izmeu politike dividendi kompanije injezine veliine i stope zadrane zarade.

Kljune rijei: politike dividendi,veliina, beta stopa, zadrana dobit, P/E.

JEL klasifikacija: G12

4 Mahdi Moradi, docent, Fakultet ekonomskih i upravnih znanosti, Sveuilite Ferdowsi ,Mashhad, Iran,

E-mail: [email protected] Mahdi Salehi, docent, Fakultet ekonomskih i upravnih znanosti, Sveuilite Ferdowsi, Mashhad, Iran, E-

mail:[email protected] Shahnaz Honarmand, Magistar financijskog manadmenta, Al-Zahra University, eheran, Iran

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