The Relation between Market Competition and Dividend Policies

This article investigates the relation between market competition and dividend policies. Using a sample of listed companies in the Tehran Stock Exchange in the period of 1387-1391, we find that firms in highly competitive industries prefer to pay more dividends. Research hypotheses are developed based on the outcome theory and substitution theory. In order to investigate the impact market competition on dividend policies. To test the hypothesis were used panel data regression model and logistic regression. Results indicate that there is a significant positive relation between dividends paid and market competition, return on assets and lifecycle. Also there is a significant negative relation between dividends paid and financial leverage. On the other hand, using the logit model, results indicate that there is a significant positive relationship between increase dividends paid and market competition. Results also demonstrate that there is a significant positive relation between omit dividends paid and return on assets and financial leverage. Also there is a significant negative relation between omitted dividends paid, market competition, growth opportunities and life cycle.