Factors Affecting the Dividend Payout: Evidence from Saudi Arabia

Abstract

Businesses need financing and investors need higher returns, which are both indispensable to each other. Considering the above fact, the current study examined the dividend payout factors affecting the Saudi cement industry. Secondary data was used to investigate the mentioned purpose from 2006 to 2020. It was noticed that the cement industry has become crucial for all other industries in general and particularly to the construction industry of Saudi Arabia. The study has employed the regression examination to explore the association regarding endogenous and exogenous variables. The present study has used the dividend payout ratio as an endogenous variable, while exogenous variables are liquidity (CR), profitability (ROA), FS (firm size), and financial leverage. The study reported that ROA has a statistically significant and positive association with the dependent variable; i.e., dividend payout ratio. ROA is a significant predictor of dividend payout, while FS, LEV, and CR have reported insignificant associations with the dividend payout ratio. The cement industry of Saudi Arabia and investors would benefit from the current study findings.