The Effect of Dividend Policy on the Market Value of the Jordanian Commercial and Islamic Banks Listed on the Amman Stock Exchange

Abstract

This study aims at examining the effect of Dividend Policy on the market value of Jordanian commercial and Islamic banks. The study population consists of all Jordanian banks listed on the Amman Stock Exchange during the period from 2008 – 2018. Data were collected from the annual reports of the sample banks. After the data collection, they were analyzed using descriptive analysis, correlation analysis, and multiple regression analysis.
 
 The results showed a statistically significant impact of dividend policy, this result indicates that there is an impact of the dividend policy on the market value of Jordanian commercial and Islamic banks listed on the ASE during the period 2008-2018. The results also showed a difference between the companies in terms of dividend policy followed, in addition, asymmetry in the Dividend Policy in banks during the study period. The study recommended a number of recommendations, including that manager of firms, should develop effective dividend payout policies to ensure that their firms pay out dividends to enhance the value of their companies and plan an efficient and reliable dividend policy, to suit the wishes of investors, and to engage stakeholders in a dialogue on dividend policy.

Determinants of Market Capitalization with Pofitability and Dividend Policy as Intervening Variables of State Owned Banks

“…The results of this study indicate that dividend policy has a positive effect on the market capitalization of State Owned Banks. This is in accordance with the bird in the hand theory and strengthens the results of previous studies from Luvembe et al, (2014), Sharma (2018) and Roman (2019).…”

“…Some investors will prefer to buy stocks that provide / distribute high dividends. The results of research by Luvembe et al, (2014), Sharma (2018) and Roman (2019) show that dividend policy has a positive effect on market capitalization. Furthermore, the results of research by Sharma (2018) and Rawlin et al (2019), shows that profitability has a positive impact on market capitalization.…”

“…The results of research by Sharma (2018) and Rawlin et al (2019) shows that profitability has a positive effect on market capitalization. Furthermore, the results of research by Luvembe et al, (2014), Sharma (2018) and Roman (2019) show that dividend policy has a positive effect on market capitalization.…”

The validity of the irrelevant theory in Middle East and North African markets: conventional banks versus Islamic banks

“…During the past two decades, researchers have started to investigate the relationship between dividend policy and the value of a firm in Arab and MENA emerging markets (Ben Naceur and Goaied, 2002; Alenazi and Barbour, 2019; Abu Roman, 2019; Budagaga, 2020). However, these empirical studies have concentrated on the impact of dividend on the market value of a firm in a single nation, apart from that Budagaga (2020), who has only addressed the relationship between dividend payout and dividend yield with market value of banks listed in MENA markets, therefore, very little is known about the relationship between dividend policy, profitability, leverage (capital structure) and investment opportunities with the value of banks in MENA countries covering a long period in the recent past.…”