International Journal of Financial Management

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Dividend Policy and Sustainability of Shareholders' Value:Case of Qatari Companies


Affiliations
1 Associate Professor, Finance and Assistant Dean, SP Jain School of Global Management, Dubai, Saudi Arabia
2 Head of International Admissions, Manipal Academy of Higher Education, Dubai, Saudi Arabia
     

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Since decades, several theories have evolved on dividend decisions and their potential impact on firms’ overall wealth and performance that led to diverse results. These researches led to formulation of various financial theories and models that became applicable to the corporate world. From this standpoint, though this paper is of serious academic research, it has profound implications for policy decisions of listed companies on Qatar stock exchange. The purpose of this paper is to examine the degree of relationship between dividend policy and market price of shares in terms of shareholders wealth; between dividend policy and earning per share in terms of shareholders wealth; and between dividend policy and performance of firm in terms of profitability. This research applied multiple regression using E-Views for a period of 6 years from 2012-2017. A sample of 30 firms listed in Qatar stock exchange has been selected by including the firms which have been paying dividends for 6 years consecutively or with the gap of 1 year at maximum and are following stable dividend policy. The findings reveal that there exists a strong positive correlation between the dividend policy (in terms of dividend per share and dividend yield) and share price, a relatively positive correlation between dividend policy (in terms of dividend per share and dividend yield), and earnings per share return on equity. All this suggests towards a strong relevance of firms’ dividend policy decisions.

Keywords

Dividend Policy, Shareholders Wealth, Firm Performance, Returns on Equity, Share Price Earning Per Share.
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  • Dividend Policy and Sustainability of Shareholders' Value:Case of Qatari Companies

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Authors

Arindam Banerjee
Associate Professor, Finance and Assistant Dean, SP Jain School of Global Management, Dubai, Saudi Arabia
Prashant K. Mishra
Head of International Admissions, Manipal Academy of Higher Education, Dubai, Saudi Arabia

Abstract


Since decades, several theories have evolved on dividend decisions and their potential impact on firms’ overall wealth and performance that led to diverse results. These researches led to formulation of various financial theories and models that became applicable to the corporate world. From this standpoint, though this paper is of serious academic research, it has profound implications for policy decisions of listed companies on Qatar stock exchange. The purpose of this paper is to examine the degree of relationship between dividend policy and market price of shares in terms of shareholders wealth; between dividend policy and earning per share in terms of shareholders wealth; and between dividend policy and performance of firm in terms of profitability. This research applied multiple regression using E-Views for a period of 6 years from 2012-2017. A sample of 30 firms listed in Qatar stock exchange has been selected by including the firms which have been paying dividends for 6 years consecutively or with the gap of 1 year at maximum and are following stable dividend policy. The findings reveal that there exists a strong positive correlation between the dividend policy (in terms of dividend per share and dividend yield) and share price, a relatively positive correlation between dividend policy (in terms of dividend per share and dividend yield), and earnings per share return on equity. All this suggests towards a strong relevance of firms’ dividend policy decisions.

Keywords


Dividend Policy, Shareholders Wealth, Firm Performance, Returns on Equity, Share Price Earning Per Share.

References