Why do financial services companies pay dividend? Evidence from Qatar Stock Exchange

• Main Authors: Sumathi Kumaraswamy, Bora Aktan, Zainab Hafedh Al Halwachi
• Format: Article
• Language: English
• Published: LLC "CPC "Business Perspectives" 2017-12-01
• Series: Investment Management & Financial Innovations
• Subjects: banks; dividend policy; earnings; financial institutions; Qatar
• Online Access: https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/9594/imfi_2017_03cont2_Kumaraswamy.pdf

This study identifies the dividend policy determinants of banks and other financial institutions listed on Qatar Stock Exchange (QSE) for a period from 2009 to 2015 through studying the impact on eight factors on banks’ dividends per share. Three models were adopted to investigate the determinants of the dividend policy and the factors that affect a bank’s decision to pay out dividends. The findings indicate that the previous year’s dividends per share, earnings per share, cash flow per share, firm size and return on average equity are positively related to the current year’s dividends per share, as hypothesized. The study shows that the leverage position, bank’s life cycle and growth opportunities are negatively related to the dividend payment. The study also reveals that banks and financial institutions in Qatar do a bit of “earnings smoothing” when comparing the earnings figures with the cash flow.