Scientific Journal Of King Faisal University
Basic and Applied Sciences
Scientific Journal of King Faisal University / Humanities and Management Sciences
Exchange (Tadawul) (2003-2016)
(Mohammed Faisal Hassan and Ahmed Ragab Abdulrahman)Abstract
Distributing or withholding profit decision are major financial decisions because of their direct relation with
shareholders. The study aimed at determining the impact of economic indicators on the cash dividends distributed
in the Saudi Stock Exchange, which is consider one of the largest Arab stock markets using a model that illustrates
these effects. The study adopted case study approach to test the hypotheses of the study where multiple correlation
and regression analyzes were used to test the validity of the study's hypotheses. The study population consists of
207 companies enlisted in the Saudi Stock Exchange. The study found that the effect of economic indicators on the
distribution of cash dividends in the Saudi stock market was variable. In addition, inflation and GDP explain the
discrepancy in cash dividends. The model used reflected the effect of these indicators on the policy of distribution
of cash profits in the Saudi market. The study interpreted this result in the light of the hypothesis of surplus or
residual since those companies preferred to use surpluses to finance development and extension processes. The
study recommends that companies need to adopt a distribution policy that takes into consideration the interests of
shareholders alongside corporate interests.
Key Words: Dividend Policy, Inflation, Share prices.
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