Exchange (Tadawul) (2003-2016)

(Mohammed Faisal Hassan and Ahmed Ragab Abdulrahman)

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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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