Ownership structure and dividend policy in Jordan

Abstract

This study aims to examine the effect of ownership structure on dividend policy ofJordanian manufacturing companies listed in Amman stock exchange. More specifically, the studyexamine several hypotheses regarding the relationship between ownership structure (namely:concentration, foreign, institutional, and managerial) and dividend policy. To achieve studyobjective, this study uses a combination of time-series and cross-section data. Five year (2014-2018) panel data of 61 companies are examined. In order to test the study hypotheses, the studyconduct F-test, Lagrange Multiplier test (LM- test), and the Hausman test to determine the beststatistical method (ordinary least squares method (OLS), fixed effects or random effects models).The empirical findings of this study show that all the ownership variables (ownershipconcentration, institutional ownership, and managerial ownership are insignificant in affecting thedividend policy, and the direction of the relationship is positive except a negative relationshipbetween foreign ownership and dividend policy. Also, the empirical finding showed that thecompany size and return on assets (ROA) were found to have a significant positive effect ondividend policy, where as leverage was found to have a significant negative effect on dividendpolicy.