Title: Evaluation and prioritisation of dividend payment factors in Tehran Stock Exchange: a logit model approach

Authors: Nasrin Alinghian

Addresses: Department of Management, University of Isfahan, Hezar Jerib, St., 81746-73441, Isfahan, Iran

Abstract: The aim of the present study is to determine the factors and indices which are used in evaluating the capability of the company in dividend payment. After reviewing the related literature, a number of factors which influence the probability of dividend payment were identified, including earning, cash flow uncertainty, cash flow, agency costs, investment opportunities, and life cycle. Afterwards, the data required for a sample consisting of 141 companies accepted in Tehran Stock Exchange were compiled during an eight-year period from 2002 to 2009. This article makes an attempt to investigate dividend payment in Iran and reveal the potential differences existing between developed and developing markets. To reach that end, an estimation of logit model was applied. After four stages, the final model was attained. The final logit model which was estimated by fixed effect panel data technique, show that cash flow uncertainty, life cycle, investment opportunities, and earning have affected on dividend payment significantly. The marginal effect indicated that the life cycle and earning of a company were the most influential factors among the aforementioned factors.

Keywords: dividends; cash flow uncertainty; logit models; profitability; life cycles; Iran; emerging markets; fixed effect panel data; dividend payments; stock exchange; stock markets; earnings; agency costs; investment opportunities.

DOI: 10.1504/IJBEX.2014.064559

International Journal of Business Excellence, 2014 Vol.7 No.5, pp.646 - 658

Published online: 27 Aug 2014 *

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