Quarterly Studies in Banking Management and Islamic Banking

Examining the relationship between dividends and company value: With a J-shaped curve approach

Document Type : Original Article

Authors

Mehdi Farrahani 1
Reyhaneh Parvizian 2
Sepideh Salehan 3

1 Assistant Professor, Islamic Azad University, Tehran West Branch

2 Tehran University

3 Student of Business Management, Islamic Azad University, Tehran West Branch

https://doi.org/10.22034/jifb.2024.461576.1570
Abstract
In this research, the relationship between dividends and company value (J-shaped curve) was investigated in companies listed on the Tehran Stock Exchange. In terms of nature and content, this research is correlational and based on the purpose of basic experimental research. Also, the current research is applied research in terms of research classification based on the nature. The time period of the research was considered from 1391 to 1401. To select the sample, the purposeful sampling method selected through a judgmental process has been used. To test the hypotheses of this research and determine the relationship between independent and dependent variables, econometric models were used, and the relevant hypotheses were investigated using the panel multivariate regression method. The results of the research showed that the free cash flow has a positive and significant relationship with the value of the company. Also, dividend has a negative and significant relationship with company value. Dividend has an effect on the relationship between free cash flow and company value and reduces the positive relationship between free cash flow and company value, and according to research results, the relationship between dividends and company value varies over time.

Keywords

Dividends
firm value
free cash flow
J-shaped curve

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