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Abstract
Dividend policy informs shareholders and investors how the financial situation of the firm is. Therefore, in situations where risk is always the determining factor for dividend policy, the company with the market power, can affect major changes in social, economic, and political events or have more successful responds toward them, and thus, is less exposed to systematic risk. Therefore, market power helps the firm to preserve firm-specific shocks from its product market or to reduce the information uncertainty that the investors of the firm face it. Hence, this study attempts to investigate the impact of product market pricing power on the firm's dividend policy. For this purpose, the data from 122 firms listed in Tehran Stock Exchange during 2009 to 2013 and Panel data model were used. The results showed that there is a reveres significant relationship between firm’s market power and the amount of dividend policy of listed firms in Tehran Stock Exchange.
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References
- Abdullah, A. 2014. Dividend Policy and Its Impact on Stock Price – A Study on Commercial Banks Listed in Dhaka Stock Exchange. Global Disclosure of Economics and Business, 3(1), 9-17.
- Baker, H.K., Farrelly, G.E. and Edelman, R.B. 1985. A survey of management views on dividend policy. Financial Management, 14(3), 78-84.
- Booth, L. 1980. Stochastic demand, output and the cost of capital: a clarification. Journal of Finance, 35(3), 795-798.
- Booth, L. 1981. Market structure uncertainty and the cost of equity capital. Journal of Banking and Finance, 5(4), 467-482.
- Booth, L., & Zhou, J. 2015. Market power and dividend policy. Managerial Finance, 41(2), 145-163.
- Brav, A., Graham, J.R., Harvey, C.R. and Michaely, R. 2005. Payout policy in the 21st century. Journal of Financial Economics, 77(3), 483-527.
- Datta, S., Iskandar-Datta, M. and Singh, V. 2013.Product market power, industry structure and corporate earnings management.Journ al of Banking & Finance, Available at: http://dx.doi.org /10.1016/ j.jbankfin. 2013.03.012.
- Gaspar, J. and Massa, M. 2006. Idiosyncratic volatility and product market competition. Journal of Business, 79(6), 3125-3152.
- Grullon, G., &Michaely, R. 2012. The impact of product market competition on firm’ payout policy.Available at WWW.SSRN.COM.
- Hoberg, G., Philips, G., &Prabhala, N. 2012. Product market threats, payouts and financial flexibility. Working Paper, University of Maryland.
- Lintner, J. 1956. Distribution of incomes of corporations among dividends, retained earnings, and taxes. American Economic Review, 46(2), 97-113.
- Rashid, S., Ayesha, R., Rab Nawaz, L., HafizaMubeen, M., & Amber, I. 2014. Determinants of Dividend Payouts in Financial Sector of Pakistan. Journal of Basic and Applied Scientific Research, 4(2), 33-42.
References
Abdullah, A. 2014. Dividend Policy and Its Impact on Stock Price – A Study on Commercial Banks Listed in Dhaka Stock Exchange. Global Disclosure of Economics and Business, 3(1), 9-17.
Baker, H.K., Farrelly, G.E. and Edelman, R.B. 1985. A survey of management views on dividend policy. Financial Management, 14(3), 78-84.
Booth, L. 1980. Stochastic demand, output and the cost of capital: a clarification. Journal of Finance, 35(3), 795-798.
Booth, L. 1981. Market structure uncertainty and the cost of equity capital. Journal of Banking and Finance, 5(4), 467-482.
Booth, L., & Zhou, J. 2015. Market power and dividend policy. Managerial Finance, 41(2), 145-163.
Brav, A., Graham, J.R., Harvey, C.R. and Michaely, R. 2005. Payout policy in the 21st century. Journal of Financial Economics, 77(3), 483-527.
Datta, S., Iskandar-Datta, M. and Singh, V. 2013.Product market power, industry structure and corporate earnings management.Journ al of Banking & Finance, Available at: http://dx.doi.org /10.1016/ j.jbankfin. 2013.03.012.
Gaspar, J. and Massa, M. 2006. Idiosyncratic volatility and product market competition. Journal of Business, 79(6), 3125-3152.
Grullon, G., &Michaely, R. 2012. The impact of product market competition on firm’ payout policy.Available at WWW.SSRN.COM.
Hoberg, G., Philips, G., &Prabhala, N. 2012. Product market threats, payouts and financial flexibility. Working Paper, University of Maryland.
Lintner, J. 1956. Distribution of incomes of corporations among dividends, retained earnings, and taxes. American Economic Review, 46(2), 97-113.
Rashid, S., Ayesha, R., Rab Nawaz, L., HafizaMubeen, M., & Amber, I. 2014. Determinants of Dividend Payouts in Financial Sector of Pakistan. Journal of Basic and Applied Scientific Research, 4(2), 33-42.