Liquidity Indicators and Their Impact on Dividend Distribution Policies an Analytical Study of a Sample of Iraqi Joint Stock Companies for the Period 2018-2023
DOI:
https://doi.org/10.59992/IJFAES.2025.v4n7p3Keywords:
Liquidity Indicators, Dividend Distribution PoliciesAbstract
This study aims to analyze the relationship between liquidity indicators and their impact on cash dividend policies among a sample of joint-stock companies listed on the Iraq Stock Exchange during the period from 2018 to 2023. Based on the eligibility and homogeneity of the data, the selected sample included nine companies. The financial data were derived from the preliminary aggregated financial statements available in the Iraq Stock Exchange. Annual financial statements from companies across various sectors were analyzed.
The study adopted a descriptive-analytical approach, utilizing a set of liquidity indicators that included five ratios: current ratio, quick ratio, cash ratio, net working capital ratio, and operating cash flow ratio as independent variables, while cash dividend policy was used as the dependent variable. The hypotheses were tested using panel data analysis models, specifically pooled regression, fixed effects, and random effects models.
The results revealed that the impact of liquidity indicators on cash dividend policies varied. The availability of liquidity was not necessarily a driver for increasing cash dividends. Some liquidity indicators showed a negative or statistically insignificant effect, reflecting a tendency by some companies toward precautionary behavior or reinvestment rather than distribution. Moreover, the model demonstrated high statistical significance, with a P-value close to zero, and strong goodness of fit, as the independent variables explained approximately 61.8% of the variation in cash dividend policies. The findings also highlighted differences among the sampled companies in their financial strategies and managerial orientations over the study period.
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