The Effect of Dividends on the Investment Decision in the Light of the Financial Reporting Quality

Nidal O. Zalloum, Eshaq M. AL Shaar

Abstract


The purpose of this study is to determine the effect of the company's dividends on the investment decision according to the financial reporting quality. The population study consisted of companies listed on Amman Stock Exchange )ASE), for the years(2002-2012). A sample of (72) companies, including (23) service companies, and (49) Industrial companies were selected. The study used the Two-Stage Least Squares (2SLS) in order to achieve the objective of the study.
The study found that the dividends have a negative effect on the investment decision. In addition, the results showed that the influence of dividends on the investment decision varies, depending on the financial reporting quality. Moreover, the study revealed that the interaction between the dividends and the financial reporting quality increases the negative effect on the investment decision. Finally, the study discovered that the interaction between the dividends and the financial reporting quality has a negative effect on the investment decision for high growth companies, while it has no effect on the investment decision for low growth companies.

Keywords


Dividends, Investment Decision, Financial Reporting Quality

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