Dividend policies of shariah-compliant and non-shariah-compliant firms: evidence from the MENA region
by Omar Farooq; Oumkeltoum Tbeur
International Journal of Economics and Business Research (IJEBR), Vol. 6, No. 2, 2013

Abstract: Do shariah-compliant firms pay higher dividends than other firms? Using data from the MENA (Morocco, Egypt, Saudi Arabia, UAE, Jordan, Kuwait, and Bahrain) region, this paper shows that shariah-compliant firms not only have higher payout ratios but also have higher likelihood to pay dividends than non-shariah-compliant firms during the period between 2005 and 2009. We argue that financial characteristics of shariah-compliant firms (i.e., low leverage, low account receivables, and low cash) are such that they pay higher dividends than their non-shariah-compliant counterparts. Furthermore, we also show that our results hold true in both legal regimes - the civil law countries and the common law countries.

Online publication date: Mon, 30-Dec-2013

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