Investigating the Factors Affecting the Relationship between Dividend Distribution and Investment
Keywords:
Dividend, Investment, Cash Flow, Net Profit, Debt, Generalized Method of Moments (GMM)Abstract
This study aims to identify and analyze the factors influencing the relationship between dividend distribution and investment among companies listed on the Tehran Stock Exchange during 2013–2022. Employing a mixed-method design, semi-structured interviews were conducted with 167 experts, executives, and board members, followed by a Likert-scale questionnaire distributed to listed firms. Quantitative data from 57 firms across six industries over ten years (2013–2022) were analyzed using panel regression models, F-Limer and Hausman tests, and the Generalized Method of Moments (GMM) in SPSS and EViews software. The results indicated that the previous year’s dividend, net profit, cash flow, and debt level significantly affected dividend decisions, while end-of-year cash showed a negative impact. The investment in machinery and equipment model demonstrated the highest explanatory power, accounting for over 90% of investment variations (adjusted R² = 0.91). Investment in inventory also showed strong explanatory validity (adjusted R² = 0.92). Overall, dividend policy exhibited high persistence, with prior-year dividends being the strongest predictor of current payouts. Dividend decisions among Iranian firms are mainly driven by profitability and liquidity dynamics, while higher leverage constrains payout policies. Among investment alternatives, machinery and equipment investment best represents the behavioral model of firms. The developed model provides valuable insights for managers to balance dividend policies with corporate investment strategies.
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Copyright (c) 2025 Mahdieh Nosrati, Sasan Mehrani, Ezzatollah Abbasiyan (Author)
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