Dividend Announcements of Banking Sector in Gulf Area; Pre, During and Post the Recent Global Financial Crisis

Abstract

This research aims to analyze the movement of dividend policy announcements impact on share prices, and the performance of all listed banks in Gulf area pre-during-post the financial crisis. This research has positioned and utilized event study method, and dividend pay-out ratio to evaluate the movements in share prices of two event windows for 65 banks (All listed banks) from 2005 to 2013. The main results for this research showed that there is a strong signaling effect since most of the windows show positive impact of dividend announcements on the CAARS. Likewise, there can be equally significant lifecycle impact since the large banks show different pay out pattern as compared with the small banks. Moreover, there has been steady dividend pay by banks at an average even in the crisis periods. In addition, a proportion of payers have increased as compared to the non-payers over years, which is related to both life cycle and competition theories. The last finding presents that banking sector in the GCC countries have not been affected like other emerging countries during the global financial crisis, because they supported by oil prices.

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

“…This means that the Jordanian companies have large assets that could influence positively on companies' performance. The result is quite similar to another Jordanian study conducted by (Jaara et al, 2018). Also, the Log(TanAss) has ranged the value from minimum and maximum: (-0.23) and (1.00).…”

Internal Dynamics of Dividend Policy in East-Asia: A Comparative Study of Japan and South Korea

“…Thus lower transaction costs and easier access to capital markets may also encourage larger firms to pay out dividends (Manneh & Naser, 2015). Empirical findings also suggest that large firms are mature, having low information asymmetry, stable cash flows, and low probability of financial distress (Al-Najjar & Kilincarslan, 2018;Bhattacharya, 1979;Cwynar et al, 2015;Gaud et al, 2005;Jaara et al, 2018;Mitton, 2004;Ramcharran, 2001). Such attributes of large firms make them less reliant on external funds for future expansion purposes.…”

“…These models have identified several firm-specific factors that can affect dividend policy. These factors include size (Jaara et al, 2018; Labhane & Das, 2015), profitability (Ahmed, 2015; King’wara, 2015), leverage (Boanyah et al, 2013; Gill et al, 2010; Jabbouri, 2016), growth opportunities (Baker & Powell, 2012; Yarram & Dollery, 2015), business risk (Holder et al, 1998; Miller & Rock, 1985), free cash flows (Anil & Kapoor, 2008; Kadioglu & Yilmaz, 2017), and taxes (Gill et al, 2010; Pattenden & Twite, 2008). This study examines the impact of the aforementioned attributes on firms’ dividend policies in Japan and South Korea.…”

“…Such highly levered firms cannot sustain a stable and higher dividend policy due to an increase in the probability of bankruptcy and transaction costs (Rozeff, 1982). Numerous empirical studies (e.g., Al-Kuwari, 2009; Iqbal & Zhang et al, 2020; Jaara et al, 2018; Kowaleski et al, 2007; Yusof & Ismail, 2016) suggest that an increase in financial leverage reduces dividend payouts of firms. Hence, our study formulates the following hypothesis:…”

“…Firm size. In line with prior literature (Iqbal et al, 2013;Jaara et al, 2018), this study uses the natural-log of total annual sales as a proxy for firm size (LOGSIZ).…”