THE IMPACT OF THE DIVIDEND POLICY ON THE STOCK PRICE :(AN EMPIRICAL STUDY OF LISTED COMPANIES ON THE MENA EXCHANGES FOR THE PERIOD 2014-2023)

Abstract

This study investigates the impact of Dividend Policy (DP) on the stock prices of the companies which are listed on MENA exchanges from 2014 to 2024. It includes two main variables: independent and dependent. The former includes a number of indicators to measure the DP, namely: profit retention rate, dividend yield, dividends per share, growth, and earnings per share. On the other hand, the latter includes stock prices at the end of the fiscal year and control variables, namely: company size, financial leverage, and profitability It employs the quantitative approach depending on descriptive analytical approach to text hypotheses. The sample represents (195) companies in sectors of banking and insurance distributed across the nine financial markets. The analysis of the data has been done by using fixed and random effects linear regression models. Results demonstrated that retention rate of earnings, dividend yield, dividends per share, and growth influence stock prices. The sharp increase in the variables was connected with higher stock prices on some stock exchanges which reflects the confidence of investors and companies’ stability related to financial policies. Consequently, it has been seen that financial leverage has a great influence on stock prices because of the increase in financial risks. It is concluded that adopting balanced DP is vital and goes hand in hand with financial performance highlighting investment opportunities which stabilize stock prices and attract investors. As a result, other studies advise studying the influence of macroeconomic changes and changes in fiscal and monetary policies on the relationship between dividend policy and stock prices.