The role moderated of some Firms’ Characteristics, on the catering theory: MENA Zone Evidence

Hadfi Bilel, TunisiaFollow

Session

Management, Business and Economics

Description

This article investigates the impact of some firms’ characteristics variables in the catering theory of dividend on the MENA Zone context. Baker and Wurgler (2004) established the new catering theory of dividend, when they used a proxy to define this theory named the dividend premium is measured by the difference between the logarithm average market to book payers and non payers. Baker and Wurgler (2004) conclude that a negative dividend premium can explain the phenomenon of disappearing dividend in the USA. This study show that profitability, liquidity and cycle life of firms present an important firm characteristics affect the dividend policy of the firms. The catering theory plays an important role to encourage managers to initiate (continue) distribute dividend. The high dividend premium encourages managers to increase the level of dividend payment and can help to introduce more number of firms’ payers and reduce the number of dividend non-payers. The investors should increase their prevailing demand of dividend to push managers to accept their request. The investor preference for dividend is driving by different factors such as the profitability, cycle life, liquidity and size explained the firms’ characteristics. To test this prediction we use the panel data from in the period from 2004 to 2013 in 600 non financial firms from 6 countries (Tunisia, Egypt, Morocco, UAE, Saudi Arabia and Kuwait).

Keywords:

Dividend premium, Firms characteristics, Panel logistic model, catering theory

Session Chair

Edmond Hajrizi

Session Co-Chair

Naim Preniqi

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-437-54-7

Location

Durres, Albania

Start Date

27-10-2017 1:00 PM

End Date

27-10-2017 2:30 PM

DOI

10.33107/ubt-ic.2017.273

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Oct 27th, 1:00 PM Oct 27th, 2:30 PM

The role moderated of some Firms’ Characteristics, on the catering theory: MENA Zone Evidence

Durres, Albania

This article investigates the impact of some firms’ characteristics variables in the catering theory of dividend on the MENA Zone context. Baker and Wurgler (2004) established the new catering theory of dividend, when they used a proxy to define this theory named the dividend premium is measured by the difference between the logarithm average market to book payers and non payers. Baker and Wurgler (2004) conclude that a negative dividend premium can explain the phenomenon of disappearing dividend in the USA. This study show that profitability, liquidity and cycle life of firms present an important firm characteristics affect the dividend policy of the firms. The catering theory plays an important role to encourage managers to initiate (continue) distribute dividend. The high dividend premium encourages managers to increase the level of dividend payment and can help to introduce more number of firms’ payers and reduce the number of dividend non-payers. The investors should increase their prevailing demand of dividend to push managers to accept their request. The investor preference for dividend is driving by different factors such as the profitability, cycle life, liquidity and size explained the firms’ characteristics. To test this prediction we use the panel data from in the period from 2004 to 2013 in 600 non financial firms from 6 countries (Tunisia, Egypt, Morocco, UAE, Saudi Arabia and Kuwait).