A survey of management views on dividend policy in Iranian firms

Purpose – The purpose of this paper is to investigate the views of chief financial officers (CFOs) of Iranian firms listed on the Tehran Stock Exchange about the factors influencing dividend policy in 2006. The paper aims to update and extend previous research on dividend policy to capture the determinants of the dividend policy of Iranian firms. Design/methodology/approach – Survey instruments were used to identify the factors that CFOs consider in formulating dividend policy, based on both theoretical and empirical works on dividends, to identify the factors that are most important in dividend policy of firms. Findings – The findings show that the most important determinants of a firm's dividend policies are the stability of cash flow, the availability of profitable investment opportunities, and stability of profitability. Also, industry type appeared to influence the importance that respondents placed on one determinant of dividend policy. Research limitations/implications – It is likely that the firms that did not respond on time may show a non-response bias. Despite lacking normal precautionary steps to increase the response rate, non-response bias may affect the findings. Another limitation of the survey methodology was that it measures beliefs and not necessarily actions. Therefore, caution should be taken in generalizing the findings. Practical implications – The findings have implications for CFOs in formulating dividend policy. Originality/value – The paper updates and extends previous research on dividend policy to capture the determinants of the dividend policy of Iranian firms.