The Influence of Dividend Payments on Company Performance: The Case of Istanbul Stock Exchange (BIST)

Abstract

The aim of this study is to analyze the relation between dividend policies and financial performances of the companies operating in Istanbul Stock Exchange (BIST). The study uses data of 172 companies outside of financial sector for the period of 2008-2011.  In the study firms are divided into two groups: the ones regularly paying dividends and the ones that don’t make regular dividend payments.  The tests were conducted in order to understand whether there is a difference between accounting and market based financial performances of these two groups or not.  Empirical analyses used multiple regression, T test methods as well as descriptive statistics.  The results of analysis showed that dividend payments had influence on companies’ performances. Furthermore, there was a positive and statistically meaningful relation between the dividend per share rate (DPS) within groups and market based performance indicator Tobin’s q while there was a statistically meaningless relation between accounting based performance indicators ROA and ROE and dividend per share rate. These results are of supporting quality for the dividend relation developed by Myron Gordon and John Lintner (GL).

Keywords: Dividend Payments, Firm Performance, Dividend Per Share, BIST