The Effect of Value of Financial Flexibility on the Dividend Policies in Listed Companies in Tehran Stock Exchange

The main concern of managers of economic entities is to choose the optimal capital structure and different ways of providing resources and financial expenditures to maximize shareholders wealth. Maximizing the company's wealth requires the optimal use of financial resources and the earning the returns and the selection of appropriate risk through the selection of favorable financial policies for the company. Undoubtedly, one of the most important factors influencing financial policies is financial flexibility. Financial flexibility indicates the ability of a company to equip financial resources to maximize the value of the company and adapt the capital structure to the needs arising from changing circumstances. The purpose of this study is to investigate the effect of the value of financial flexibility on the dividend policies of companies of listed companie in Tehran Stock Exchange. The statistical sample includes 112 companies in the period 2010 to 2019. To test the hypotheses, a multivariate regression model, with pooled data is used and stata software is employed to analyse the data. Findings indicate a significant and inverse effect of the value of financial flexibility on dividend policies of companies listed on the Tehran Stock Exchange. Higher levels of financial flexibility value; a decrease in cash dividends will lead to a tendency not to pay cash dividends and to hold larger amounts of cash. Therefore, companies with more financial flexibility encourage their shareholders to keep cash in the company, or management has a greater ability to limit dividend payments.