The Relationship between Financial Performance Indicators and Cash Dividends under the Moderating Role of Inflation level: Evidence from non-Financial Companies listed on the Egyptian Stock Exchange

The research aimed to study and test the impact of inflation on the relationship between the company’s financial performance (return on equity, return on assets, earnings per share, share price) as independent variables and the share of annual cash dividends as a dependent variable, considering some of the company’s non-financial characteristics. (company: size, age, activity nature, ownership concentration) as monitoring variables, through a theoretical, analytical, and applied study on a sample of 100 non-financial companies listed on the Egyptian Stock Exchange during the period from 2016 to 2023, with 742 annual observations.
The theoretical study concluded that the company's financial performance is more important in making the decision on cash dividends per share compared to non-financial performance. The results of the applied study reinforced the importance of financial performance in making the decision on cash dividends to investors, and that the most important of these determinants is: The stock price (Pearson correlation coefficient = .7140), then the earnings per share (.6680), then the return on equity (.2610), and finally of return on assets (.1340). The explanatory power of multiple regression models, which reflects the extent to which the dependent variable changes because of changing each of the following: Earnings per share is 62.1%, share price is 51.7%, return on equity is 16.6%, return on assets is 4.2%, in the presence of the moderating variable (inflation) and control variables. The results also confirmed the significance and positivity of the relationship between all the independent variables of the research and the dependent variable, and that the effect of inflation rates on the basic relationship of the research was fundamental to the relationship between cash dividends per share and only two independent variables: The return on equity, earnings per share, and the strength and power of the relationship between the control variables and the dependent variable also varied.
Finally, the research recommended the importance of conducting more research on the importance of identifying the factors that affect the prediction of cash dividends as one of the most important determinants of the investment decision in Egyptian companies, in order to rationalize the decisions of all users in general and shareholders and financiers in particular, as well as the importance of focusing on the factors that improve the value of Egyptian joint-stock companies, thereby enhancing the role of the capital market in the growth of the national economy.