TY - CHAP
T1 - Dividend policy
T2 - The case of Shariah-compliant firms
AU - Anwer, Zaheer
AU - Mohamad, Shamsher Mohamad Ramadili
AU - Rasid, Mohamed Eskandar Shah Mohamed
AU - Kabir Hassan, M.
AU - Paltrinieri, Andrea
N1 - Publisher Copyright:
© 2019 selection and editorial matter, M. Kabir Hassan, Mamunur Rashid and Sirajo Aliyu.
PY - 2019/6/4
Y1 - 2019/6/4
N2 - Shariah-compliant firms (SCF) cannot use debt to mitigate agency problems, and in this scenario the dividend payout policy becomes a highly important tool of corporate governance for shariah-compliant investors. This chapter highlights the dividend payout behaviour of SCF by comparing them to conventional firms. We performed a detailed review of existing literature and also calculated descriptive statistics, using various specifications using a sample of representative SCF and market firms for United States (US) market from 2006-2015, in order to investigate if the dividend payout behaviour of SCF differs from the market. However, we did not find any notable difference. Our results also showed no difference in payout decisions at different levels of idiosyncratic risk. In summary, we observed that firms with good governance, large asset size, higher profitability, higher Retained Earnings/Total Earnings (RE/TE) and lower market-book ratio, lower idiosyncratic risk and lower financial constraints, on average, pay higher dividends. The results remain similar across both kinds of firms.
AB - Shariah-compliant firms (SCF) cannot use debt to mitigate agency problems, and in this scenario the dividend payout policy becomes a highly important tool of corporate governance for shariah-compliant investors. This chapter highlights the dividend payout behaviour of SCF by comparing them to conventional firms. We performed a detailed review of existing literature and also calculated descriptive statistics, using various specifications using a sample of representative SCF and market firms for United States (US) market from 2006-2015, in order to investigate if the dividend payout behaviour of SCF differs from the market. However, we did not find any notable difference. Our results also showed no difference in payout decisions at different levels of idiosyncratic risk. In summary, we observed that firms with good governance, large asset size, higher profitability, higher Retained Earnings/Total Earnings (RE/TE) and lower market-book ratio, lower idiosyncratic risk and lower financial constraints, on average, pay higher dividends. The results remain similar across both kinds of firms.
UR - http://www.scopus.com/inward/record.url?scp=85108047602&partnerID=8YFLogxK
U2 - 10.4324/9781351061506-8
DO - 10.4324/9781351061506-8
M3 - Chapter
AN - SCOPUS:85108047602
SN - 9781138480919
SP - 147
EP - 170
BT - Islamic Corporate Finance
PB - Taylor and Francis
ER -