An Empirical Investigation of Corporate Dividend Payout Policy in an Emerging Market: Evidence from Palestine Securities Exchange

Abstract

This manuscript aims at investigating factors that affect corporate dividend policy of the listed companies on Palestine Securities Exchange. For this purpose, the study considers the impact of six explanatory determinants namely, firm’s size, profitability, risk, leverage, liquidity and growth opportunities by using balanced panel dataset of Palestinian listed firms between the years 2009 and 2013. The sample which was investigated is composed of 24 listed and traded companies as of December 2013. Descriptive analysis, multicollinearity analysis and multiple regression analysis were used to test the model of the study. Empirical findings show that that growth, risk, and profitability explanatory variables have positive and statistically significant association with dividends payout ratio. Furthermore, the results indicate that the firm size and leverage ratio factors  were found to have statistically no significant relationship with dividends payout ratio. Liquidity appeared to have a negative association with dividends payout but not statistically significant.

Keywords: Dividend Payout Policy, Palestine Securities Exchange