The Impact of Dividends on Stock Liquidity and its Impact on the Efficiency of Investment Decisions - an Applied Study on Companies listed on the Egyptian Stock Exchange

Document Type : Original Article

Authors

1 Lecturer in the Accounting Department, Faculty of Commerce, Benha University

2 Accounting Department Banha University Faculty of Commerce

Abstract

The study aimed to analyze the impact of dividends on stock liquidity and its impact on the efficiency of investment decisions, by applying on companies listed on the Egyptian Stock Exchange during the period from (2015 to 2022). Dividends were measured using the Dividend Payout Ratio, which is calculated by dividing the dividend distributions per share by earnings per share. The stock liquidity is measured by Share Turnover Ratio. Finally, the Efficiency of Investment Decisions was measured depending on two measures Chen et al. 2011 and Biddle et al. 2009.
The study concluded that there is a significant adverse impact of dividends on stock liquidity using PCSE and Robust-OLS methods. There is a significant positive impact of dividends in the previous year on the present value of investment decisions efficiency in its two indicators (Biddle et al. 2009 and Chen et al. 2011) according to the PCSE and Robust-OLS methods. There is also a significant adverse impact of the value of stock liquidity in the previous year on the current value of investment decisions efficiency in its two indicators (Biddle et al. 2009 and Chen et al. 2011), according to the PCSE and Robust-OLS methods. Finally, there is a significant impact of dividends on the investment decisions efficiency through stock liquidity.

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