Why do financial services companies pay dividend? Evidence from Qatar Stock Exchange


Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

This study identifies the dividend policy determinants of banks and other financial institutions listed on Qatar Stock Exchange (QSE) for a period from 2009 to 2015 through studying the impact on eight factors on banks’ dividends per share. Three models were adopted to investigate the determinants of the dividend policy and the factors that affect a bank’s decision to pay out dividends. The findings indicate that the previous year’s dividends per share, earnings per share, cash flow per share, firm size and return on average equity are positively related to the current year’s dividends per share, as hypothesized. The study shows that the leverage position, bank’s life cycle and growth opportunities are negatively related to the dividend payment. The study also reveals that banks and financial institutions in Qatar do a bit of “earnings smoothing” when comparing the earnings figures with the cash flow.

view full abstract hide full abstract
    • Table 1. Independent variables definitions and expected relationship with the dependent variable
    • Table 2. Results of the Hausman test
    • Table 3. Pearson correlation matrix
    • Table 4. Results of the Variance Inflation Factor (VIF)
    • Table 5. Results of Koenker test and White test
    • Table 6. Results of the Wooldridge test
    • Table 7. Shapiro-Wilk test results
    • Table 8. Variables descriptive statistics
    • Table 9. Association between a firms’ performance and its changes in the dividend payment
    • Table 10. Results of Lintner’s model (model (A) and (modified model (A)
    • Table 11. Results of Lintner’s extended model (model (B)) and modified extended model (B)
    • Table 12. Summary of model (B) results of coefficients relationship direction and significance
    • Table 13. Results of model (C) – logit regression