Abstract

The major purpose of this paper is to identify and analyse the influence of concentrated ownership and institutional ownership on dividend policy for Chemical and Medical firms listed on the Tehran Stock Exchange (TSE) from 2002 to 2008. We used multiple regressions to examine the influence of ownership structure on dividend per share (DPS). The ownership structure variables used in this study include concentrated ownership and institutional ownership, while the control variables include free cash flow (FCF), leverage (Lev), growth opportunities (Q), and firm size. In order to test the hypotheses, the required data and information were collected from the annual reports of the official bulletins of the Tehran Stock Exchange (TSE), market information, stock organization library, and stock sites such as www.rdis.ir and www.irbourse.com. Based on a sample size of 35 chemical and medical firms listed on the TSE from 2002 to 2008, we found out that dividend payout is positively associated with concentrated ownership and institutional ownership. The results suggest that firms with high FCF, low leverage, low growth opportunities and higher size have higher distributed dividend level. For assistance to market analysts and other investors, regarding act to optimal investments and decisions, from an understanding of relationship between firm’s ownership structure and dividend payout level.

Key words: Dividend policy, ownership structure, large shareholder, free cash flow, agency costs.