The relationship between intellectual capital efficiency and firms’ dividend policy: Do CEO characteristics matter?
-
DOIhttp://dx.doi.org/10.21511/imfi.21(3).2024.08
-
Article InfoVolume 21 2024, Issue #3, pp. 84-95
- 167 Views
-
50 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The financial challenges facing the Jordanian economy require careful attention and strategic responses. Addressing these challenges may necessitate increased investment. This study explores the relationship between intellectual capital efficiency and firms’ dividend policies and the potential impact of CEO characteristics on this relationship. An analysis was based on data from 90 Jordanian service and manufacturing companies from 2015 to 2019. The study employs the value-added intellectual capital coefficient (VAIC) to measure intellectual capital efficiency and uses the dividend payout ratio to represent dividend policy. The findings indicate a positive relationship between VAIC and dividend policy, suggesting that companies with higher intellectual capital efficiency tend to distribute higher dividends. However, CEO characteristics, such as age, tenure, and educational background, do not significantly affect this relationship. These results imply that strong corporate governance mechanisms are likely in place, ensuring effective decision-making processes and protecting stakeholders’ interests. By focusing on intellectual capital, firms can enhance their operational performance and attractiveness to investors, indirectly supporting economic stability.
- Keywords
-
JEL Classification (Paper profile tab)M41, O34, G35
-
References52
-
Tables3
-
Figures0
-
- Table 1. Descriptive statistics
- Table 2. Pearson correlation matrix
- Table 3. Regression results
-
- Abdullah, H. (2021). Profitability and Leverage as Determinants of Dividend Policy: Evidence of Turkish Financial Firms. Eurasian Journal of Management & Social Sciences, 2(3).
- Abdulwahab, A. I., Bala, H., Yahaya, O., & Khatoon, G. (2023). Moderating Effect of Risk Committee Presence on The Nexus Between CEO Characteristics and Dividends Policy: Evidence from Listed Companies in Nigeria. Nigerian Journal of Management Sciences, 24(1).
- Ahangar, R. G. (2011). The Relationship between Intellectual Capital and Financial Performance: An Empirical Investigation in an Iranian Company. African Journal of Business Management, 5, 88-95.
- Al-Ghazali, A. M. (2014). The Economic and Behavioral Factors Affecting Corporate Dividend Policy: Theory and Evidence (Doctoral Dissertation). University of Bath.
- Alturiqi, A., & Halioui, K. (2020). The Impact of Intellectual Capital on Firms’ Performance: Evidence from Saudi Arabia. Accounting and Finance Research, 9(4), 1-26.
- Arvidsson, S. (2011). Disclosure of Non-Financial Information in the Annual Report: A Management Team Perspective. Journal of Intellectual Capital, 12(2), 277-300.
- Baker, H., K., & Kolb, R., W. (2009). Dividends and Dividend Policy, John Wiley & Sons, New Jersey.
- Bamber, L. S., Jiang, J., & Wang, I. Y. (2010). What’s My Style? The Influence of Top Managers on Voluntary Corporate Financial Disclosure. The Accounting Review, 85(4), 1131-1162.
- Barney, J. (1991). Special Theory Forum the Resource-Based Model of the Firm: Origins, Implications, and Prospects. Journal of Management, 17(1), 97-98.
- Bataineh, H., Abbadi, S. S., Alabood, E., & Alkurdi, A. (2022). The Effect of Intellectual Capital on Firm Performance: The Mediating Role of Family Management. Journal of Islamic Accounting and Business Research, 13(5), 845-863.
- Battisti, E., Nirino, N., Christofi, M., & Vrontis, D. (2022). Intellectual Capital and Dividend Policy: The Effect of CEO Characteristics. Journal of Intellectual Capital, 23(1), 127-143.
- Bertrand, M., & Schoar, A. (2003). Managing with Style: The Effect of Managers on Firm Policies. The Quarterly Journal of Economics, 118(4), 1169-1208.
- Briano-Turrent, G. D., Li, M., & Peng, H. (2020). The Impact of Family-CEOs and their Demographic Characteristics on Dividend Payouts: Evidence from Latin America. Research in International Business and Finance, 51, 101086.
- Bsoul, R., Atwa, R., Odat, M., Haddad, L., & Shakhatreh, M. (2022). Do CEOs’ Demographic Characteristics Affect Firms’ Risk-Taking? Evidence from Jordan. Cogent Business & Management, 9(1), 2152646.
- Caribano, L., Garcia-Ayuso, M., & Sanchez, P. (2000). Accounting for Intangibles: A literature Review. Journal of Accounting Literature, 19, 102-130.
- Chen, Z., Cheung, Y.-L., Stouraitis, A. & Wong, A.W.S. (2005). Ownership Concentration, Firm Performance, and Dividend Policy in Hong Kong. Pacific-Basin Finance Journal, 13(4), 431-449.
- Clarke, M., Seng, D., & Whiting, R.H. (2011). Intellectual Capital and Firm Performance in Australia. Journal of Intellectual Capital, 12(4), 505-530.
- Deshmukh, S Goel, A. M., & Howe, K. M. (2013). CEO Overconfidence and Dividend Policy. Journal of Financial Intermediation, 22, 440-463.
- El Ammari, A. (2021). Do CEO Duality and Ownership Concentration Impact Dividend Policy in Emerging Markets? the Moderating Effect of Crises Period. International Journal of Financial Studies, 9(4), 62.
- Edvinsson, L. (1997). Developing Intellectual Capital at Skandia. Long Range Planning, 30(3), 366-373.
- Farag, H., & Mallin, C. (2018). The Influence of CEO Demographic Characteristics on Corporate Risk-Taking: Evidence from Chinese IPOs. The European Journal of Finance, 24(16), 1528-1551.
- Faulkner, M., & García-Feijóo, L. (2022). Hot-Stove Effects: The Impact of CEO Past Corporate Experiences on Dividend Policy. Journal of Financial and Quantitative Analysis, 57(5), 1695-1726.
- Gala, P., & Kashmiri, S. (2022), Exploring the Dark Side of Integrity: Impact of CEO Integrity on Firms’ Innovativeness, Risk-Taking and Proactiveness. European Journal of Marketing, 56(7), 2052-2102.
- Griffin, C. H. (2010). Liquidity and Dividend Policy: International Evidence. International Business Research, 3(3), 3.
- Gujarati, D. (2003). Basic Econometrics. McGraw- Hill, NewYourk.
- Gul, S., Ullah, I., Gul, H., & Rasheed, S. (2020). The Factors Affecting Dividend Policy: Empirical Study from Pharmaceutical’s Companies in Pakistan (PSX). European Journal of Business and Management Research, 5(5).
- Hambrick, D.C. & Mason, P.A. (1984). Upper Echelons: The Organization as a Reflection of its Top Managers. The Academy of Management Review, 9(2), 193-206.
- Hossain, M. N., Rabarison, M. K., Ater, B., & Sobngwi, C. K. (2023). CEO marital status and dividend policy. Journal of Corporate Finance, 78, 102342.
- Kadim, A., Sunardi, N., & Husain, T. (2020). The Modeling Firm’s Value Based on Financial Ratios, Intellectual Capital and Dividend Policy. Accounting, 6(5), 859-870.
- Khan, M. N., Naeem, M. U., Rizwan, M., & Salman, M. (2016). Factors Affecting the Firm Dividend Policy: An Empirical Evidence from Textile Sector of Pakistan. International Journal of Advanced Scientific Research and Management, 1(5), 144-149.
- Kılınçarslan, E. (2018). The Factors Determining Dividend Policy of Financial Firms Listed on the Borsa Istanbul. Boğaziçi Journal Review of Social, Economic and Administrative Studies, 32(1), 75-109.
- Kim, J., & Jang, S. (. (2010). Dividend Behavior of Lodging Firms: Heckman’s Two-Step Approach. International Journal of Hospitality Management, 29, 413-420.
- Kumshe, A. M., Anaso, I. O., & Gulani, M. G. (2020). CEO Characteristics and Dividend Payout in Sub-Saharan Africa. European Journal of Accounting, Auditing and Finance Research, 8(6), 46-63.
- Li, J., & Tang, Y. I. (2010). CEO Hubris and Firm Risk-Taking in China: The Moderating Role of Managerial Discretion. Academy of Management Journal, 53(1), 45-68.
- Likitratcharoen, D., Jiraporn, P., & Kanitpong, T. (2012). Propensity to Pay Dividends and CEO Reputation. European Journal of Scientific Research, 82(1), 82-88.
- Lunawat, R. (2013). The role of Information in Building Reputation in an Investment/Trust Game. European Accounting Review, 22(3), 513-532.
- Martino, P., Rigolini, A., & D’Onza, G. (2020). The Relationships between CEO Characteristics and Strategic Risk-Taking in Family Firms. Journal of Risk Research, 23(1), 95-116.
- Nielsen, C., & Farooq, O. (2015). Intellectual Capital Disclosure and Dividend Policy: Evidence from the Danish Biotechnology Sector. International Journal of Learning and Intellectual Capital, 12(1), 82-102.
- Odat, M., & Bsoul, R. (2022). The Role of Intellectual Capital in Firms’ Performance and Market Value: Evidence from Jordan. International Journal of Management and Sustainability, 11(4), 258-272.
- Orens, R., & Reheul, A. M. (2013). Do CEO Demographics Explain Cash Holdings in SMEs? European Management Journal, 31(6), 549-563.
- Pattiruhu, J. R., & Paais, M. (2020). Effect of Liquidity, Profitability, Leverage, and Firm Size on Dividend Policy. The Journal of Asian Finance, Economics and Business (JAFEB), 7(10), 35-42.
- Patzelt, H. (2010). CEO Human Capital, Top Management Teams, and the Acquisition of Venture Capital in New Technology Ventures: An Empirical Analysis. Journal of Engineering and Technology Management, 27(3-4), 131-147.
- Pulic, A. (1998). Measuring the Performance of Intellectual Potential (IP) in Knowledge Economy. In Tiffany, C. & Jennifer, S. (Eds.). Paper Presented at the 19th Annual National Business Conference. DeGroote School of Business.
- Riaz, S., Liu, Y., & Ahmad, M. I. (2016). Dividend Policy and Corporate Governance Perspective. Accounting and Finance Research, 5(3), 77-86.
- Sanders, S. G., & Hambrick D. C. (2007). Swinging for the Fences: The Effects of CEO Stock Options on Company Risk-Taking and Performance. Academy of Management Journal, 50, 1055-1078.
- Shubiri, D. F. (2011). Determinants of Changes Dividend Behavior Policy: Evidence from the Amman Stock Exchange. Far East Journal of Psychology and Business, 4(2), 1-5.
- Smriti, N., & Das, N. (2018). The Impact of Intellectual Capital on Firm Performance: A Study of Indian Firms Listed in COSPI. Journal of Intellectual Capital, 19(5), 935-964.
- Steward, T. A. (2000). Intellectual Capital: The New Wealth of Organization. Journal of Intellectual Capital, 21(1), 60-70.
- Suwaidan, M.S., & Khalaf, L. S. (2020). The Effect of Board Composition and Ownership Structure on Dividend Policy: Evidence from Jordan. International Journal of Innovation, Creativity and Change, 8(14), 550-567.
- Taleb, Lotfi, and Béchir Ben Lahouel. (2020). Dividend Policy: A Governance Tool in Times of Crisis? Question(s) of Management, 4, 45-61.
- Turakpe, M. J., & Fiiwe, J. (2017). Dividend Policy and Corporate Performance: A Multiple Model Analysis. Equatorial Journal of Finance and Management Sciences, 2(2), 1-16.
- Wen, Y., & Jia, J. (2010). Institutional Ownership, Managerial Ownership and Dividend Policy in Bank Holding Companies. International Review of Accounting, Banking and Finance, 2(1), 8-21.