How Moroccan managers view dividend policy

Abstract

Purpose – The purpose of this paper is to survey managers of firms listed on the Casablanca Stock Exchange (CSE) to learn their views about the factors influencing dividend policy, dividend issues, and explanations for paying dividends. It compares the results to similar dividend surveys in the USA, Canada, Indonesia, and India. Design/methodology/approach – The study uses a mail survey of CSE listed firms that paid one or more cash dividends to common stock holders between June 1, 2010 and September 30, 2014 as the primary means of collecting data. Findings – The evidence shows that the most important determinants of a firm’s dividend policy are the level of current earnings, stability of earnings, and needs of current shareholders. A significant correlation exists between the overall rankings of the 25 factors influencing dividend policy between managers of Moroccan firms and those of USA, Canadian, Indonesian, and Indian firms. Managers of Moroccan firms perceive that dividend policy affects firm value. Managers view multiple theories including signaling, agency, catering, and life cycle explanations as credible and contribute in explaining why their firms pay dividends. Research limitations/implications – Despite a high response rate of almost 55 percent, the number of responses limits the ability to divide the sample firms by size, industry, and other characteristics and to test for statistically significant differences between various groups. Originality/value – This is the first survey-based research designed to document how Moroccan managers view dividends. Although evidence suggests that some factors are consistently more important than others, no universal set of factors is likely to be applicable to all firms.