What Determines the Dividend Payout Ratio for Jordanian Industrial Firms?

Abstract

There is a plethora of empirical evidence testing theories which have been proposed to explain dividend policies and assessments of managerial opinions for firms listed on developed markets’ stock exchanges. In contrast, the evidence for emerging markets is limited. We investigate the determinants of the dividend payout ratio (DPR) for a sample of Jordanian listed firms. Consistent with the agency cost hypothesis, the level of inside ownership, the number of shareholders and the level of institutional ownership significantly influenced the DPR. Firm size was also significant supporting the transaction-cost hypothesis. Our empirical analysis failed to find any evidence to support the signalling hypothesis. JEL Classification: G32, G35, G38