Examining the Non-Linear Relationship between Dividend Policy and Price-Earnings Ratio in Companies Listed on Tehran Stock Exchange

Subject Areas : Financial Economics

Hadi Amini-Harati ¹ , fatemeh samadi ² , Mostafa Hashemi Tilehnouei ³

1 - Masters Degree in Financial management, Department of Management, East Tehran Branch, Islamic Azad University, Tehran, Iran
2 - Assistant Professor, Department of Management, East Tehran Branch, Islamic Azad University, Tehran, Iran.
3 - Depart of Management, East Tehran Branch, Islamic Azad University, Tehran, Iran

Received: 2023-04-10 Accepted : 2024-10-28

Keywords: Profitability, Dividend Policy, Price-Earnings Ratio,

Abstract :

The aim of this study was to investigate the effect of profitability on nonlinear relationship between dividend policy and price-earnings ratio. In this study, dividend payout ratio and profitability as the independent variables, price-earnings ratio as dependent variables and growth rate of earnings per share, risk-free interest rate, asset returns, financial leverage, company's equity ratio and Company life are as control variables. The study population according to the subject and its application is active companies in the Tehran Stock Exchange. In this study, 91 samples were selected. This study used data from companies listed on Tehran Stock Exchange at the beginning of 2011 until the end of 2015 for one year to collect and test hypotheses have been proposed. In this study, regression analysis was used to test the effect of profitability on nonlinear relationship between dividend policy and price-earnings ratio in panel data method with fixed effects. The results showed that there is a nonlinear relationship between dividend policy and price-earnings ratio. But profitability does not affect the nonlinear relationship between dividend policy and price-earnings ratio.