Profitability and Leverage as Determinants of Dividend Policy: Evidence of Turkish Financial Firms

Hariem Abdullah

Accounting Department, University of Sulaimani, Business and Management Department, Faculty of Administrative Sciences and Economics, Tishk International University, Kurdistan Region, Erbil, Iraq.

Web of Science Research ID: AAI-8896-2021

Correspondence: [email protected]


The purpose of this study is to investigate the impact of profitability and leverage ratios on the determination of dividend policy for Turkish financial firms listed on Borsa Istanbul. In order to do so, secondary longitudinal data were collected for the listed financial firms from the DataStream database over the period 2008-2020. The financial crisis of 2007-2008 affected the sector undoubtedly. Thus, it is important to investigate how dividend policy behaves with debt level and level of profitability in the financial sector of developing countries after the well-known financial crisis.  The research expects that both profitability and leverage have a significant correlation with the dividend payout ratio. Consistent to the findings of the majority of the prior empirical studies, the results of this study found that both profitability and leverage are negatively associated with the dividend payout ratio.

Keywords: Dividend policy, Profitability, Leverage, financial firms, and Borsa Istanbul.

Download the PDF Document


Published: November 30, 2021



Abdullah H., & Aziz, H. (2017). Impact of Just-In-Time Manufacturing on Profit Maximization. International Business Management, 11(7) 1462-1468.

Abdullah, H. (2013). An analysis of the value relevance of accounting information within the UK after the adoption of International Financial Reporting Standards. Maters Thesis, University of Leicester, UK.

Abdullah, H. (2020). Capital structure, corporate governance and firm performance under IFRS implementation in Germany. PhD Thesis, Near East University, Cyprus.

Abdullah, H. A., Awrahman, H. G., & Omer, H. A. (2021). Effect of Working Capital Management on The Financial Performance of Banks: An Empirical Analysis for Banks Listed on The Iraq Stock Exchange. Qalaai Zanist Scientific Journal, 6(1), 429-456.

Abdullah, H., & Fatah, N. (2020). The effect of the COVID-19 pandemic on capital stock gains: evidence of large stock exchanges. Third scientific international conference of Al-Mustansiriyah University, Baghdad.

Abdullah, H., & Tursoy, T. (2019). Capital structure and firm performance: evidence of Germany under IFRS adoption. Review of Managerial Science, 15(2), 379-398.

Abdullah, H., & Tursoy, T. (2021). Capital structure and firm performance: a panel causality test. University Library of Munich, Germany.

Abdullah, H., Faraj, S. A., & Narmen, A. (2016). The costs of social responsibility and its impact on the reduction of environmental risks. AL-Anbar University journal of Economic and Administration Sciences8(16), 463-486.

Ahmed, A. M. (2018). The impact of financial statement analysis on the profitability assessment: applied study of Kirkuk company for producing constructional materials. Studies and Scientific Researches. Economics Edition, (28).

Ahmed, R., & Abdullah, H. (2016). Proposed Framework of Audit Fees Determinants in Kurdistan Region. European Journal of Business and Management, 8(12), 1-12.

Aivazian, V., Booth, L., & Cleary, S. (2003). Do emerging market firms follow different dividend policies from US firms?. Journal of Financial research26(3), 371-387.

Akalpler, E., & Abdullah, H. (2020). The Impact of IFRS Adoption as Control Variable on the Stock Market-Growth Nexus: Model Countries Germany and Poland. PROCEEDINGS E-BOOK, 143.

Amidu. M and Abor, J. (2006). Determinants of dividend payout ratios in Ghana. The Journal of Risk Finance, 7(2),136-145.

Asif, A., Rasool, W., & Kamal, Y. (2011). Impact of financial leverage on dividend policy: Empirical evidence from Karachi Stock Exchange-listed companies. African Journal of Business Management5(4), 1312.

Baker, H. K., & Powell, G. E. (1999). How corporate managers view dividend policy. Quarterly Journal of Business and Economics, 17-35.

Baker, H. K., Kilincarslan, E., & Arsal, A. H. (2017). Dividend policy in Turkey: Survey evidence from Borsa Istanbul firms. Global Finance Journal. In press.

Banerjee, S. (2016). Determinants of Dividend Policy for Selected Information Technology Companies in India: An Empirical Analysis. Parikalpana: KIIT Journal of Management12(1), 11.

Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management. Cengage Learning.

Brunzell, T., Liljeblom, E., Löflund, A., & Vaihekoski, M. (2014). Dividend policy in Nordic listed firms. Global Finance Journal25(2), 124-135.

Budur, T., & Demir, A. (2019). Leadership effects on employee perception about CSR in Kurdistan Region of Iraq. International Journal of Social Sciences & Educational Studies, 5(4), 184-192.

Danis, A., Rettl, D. A., & Whited, T. M. (2014). Refinancing, profitability, and capital structure. Journal of Financial Economics114(3), 424-443.

Gill, A., Biger, N., & Tibrewala, R. (2010). Determinants of dividend payout ratios: evidence from United States. The Open Business Journal3(1).

Gul, S., Sajid, M., Razzaq, N., Iqbal, M., & Khan, M. B. (2012). The relationship between dividend policy and shareholders’ wealth. Economics and Finance Review2(2), 55-59.

Hamza, S. M., & Hassan, Z. (2017). Impact of dividend policy on shareholders wealth: a comparative study among dividend paying and non-paying technology-based firms in USA. International Journal of Information, Business and Management9(3), 1.

Jabbouri, I. (2016). Determinants of corporate dividend policy in emerging markets: Evidence from MENA stock markets. Research in International Business and Finance37, 283-298.

Jaf, R. A., Sabr, S. A., & Nader, K. A. (2015). Impact of management accounting techniques on achieve competitive advantage. Research Journal of Finance and Accounting, 6(4), 84-99.

Kajola, S. O., Adewumi, A. A., & Oworu, O. O. (2015a). Dividend pay-out policy and firm financial performance: evidence from Nigerian listed non-financial firms. International Journal of Economics, Commerce and Management, 1-12.

Kajola, S. O., Desu, A. A., & Agbanike, T. F. (2015b). Factors influencing dividend payout policy decisions of Nigerian listed firms. International Journal of Economics, Commerce and Management3(6), 539-557.

Kazmierska-Jozwiak, B. (2015). Determinants of Dividend Policy: Evidence from Polish Listed Companies. Procedia Economics and Finance23, 473-477.

Khan, N. U., Jehan, Q. U. A. S., & Shah, A. (2017). Impact of taxation on dividend policy: Evidence from Pakistan. Research in International Business and Finance42, 365-375.

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2010). Financial accounting: tools for business decision making. John Wiley & Sons.

Koop, G. (2006). Analysis of financial data. Chichester; Hoboken, NJ: John Wiley & Sons Inc..

Kuzucu, N. (2015). A Survey of Managerial Perspective on Corporate Dividend Policy: Evidence from Turkish Listed Firms. International Journal of Research in Business and Social Science. 4(2).

Mahadwartha, P. A. (2003). Predictability power of dividend policy and leverage policy to managerial ownership in Indonesia: an agency theory perspective. Jurnal Ekonomi dan Bisnis Indonesia, 18(3).

Manneh, M. A., & Naser, K. (2015). Determinants of corporate dividends policy: Evidence from an emerging economy. International Journal of Economics and Finance7(7), 229.

Masum, A. A. (2014). Dividend policy and its impact on stock price–A study on commercial banks listed in Dhaka stock exchange. Global Disclosure of Economics and Business, 3(1).

Mohammed, A. A., Khzer, K. A. and Abdullah, H. A. (2019). Challenges Facing Accounting Education in the Kurdistan Region Universities: A survey study, Koya University Journal of Humanities and Social Sciences, 2(1), 109-117. doi: 10.14500/kujhss.v2n1y2019.pp109-117.

Mokaya, S., Nyangara, D., & James, L. (2013). The effect of dividend policy on market share value in banking industry: the case of national bank of kenya. International journal of arts and commerce2(2).

Musiega, M. G., Alala, O. B., Douglas, M., Christopher, M. O., & Robert, E. (2013). Determinants of Dividend Payout Policy Among Non-Financial Firms on Nairobi Securities Exchange, Kenya. International journal of scientific & Technology Research2(10), 253-266.

Myers, S.C. (1984). The capital structure puzzle. Journal of Finance, 39 (3), pp. 575-592.

Naceur, S. B., & Goaied M. (2002). The relationship between dividend policy, financial structure, profitability, and firm value. Applied Financial Economics12(12), 843-849.

Nizar Al-Malkawi, H. A. (2007). Determinants of corporate dividend policy in Jordan: an application of the Tobit model. Journal of Economic and Administrative Sciences23(2), 44-70.

Olowe, R. A., & Moyosore, S. L. (2014). Determinants of Dividend Pay-out in the Nigerian Banking Industry. Proceedings of 9th Annual London Business Research Conference, ISBN: 978-1-922069-56 (Vol. 6).

Ouma, O. P. (2012). The relationship between dividend payout and firm performance: a study of listed companies in Kenya. European Scientific Journal, ESJ8(9).

Ozuomba, C. N., Anichebe, A. S., & Okoye, P. V. C. (2016). The effect of dividend policies on wealth maximization–a study of some selected plcs. Cogent Business & Management3(1), 1226457.

Patra, A., & Dhar, P. (2017). Impact of Dividend Policy on Shareholders’ Value: A Study on Apollo Hospitals Ltd. Bharatiya Vidya Bhavan Institute of Management Science, Kolkata-97, 11.

Patra, T., Poshakwale, S., & Ow-Yong, K. (2012). Determinants of corporate dividend policy in Greece. Applied Financial Economics22(13), 1079-1087.

Rehman, A., & Takumi, H. (2012). Determinants of dividend payout ratio: Evidence from Karachi Stock Exchange (KSE). Journal of Contemporary Issues in Business Research1(1), 20-27.

Renneboog, L., & Szilagyi, P. G. (2015). How relevant is dividend policy under low shareholder protection?. Journal of International Financial Markets, Institutions and Money.

Rozeff, M. S. (1982). Growth, Beta and Agency cost as Determinants of Dividend Payout Ratio. The Journal of Financial Research. 5, 249–259.

Saed, Y. A. H., Ahmed, R. A., & Abdullah, H. A. (2021). Consideration of environmental cost disclosure in the oil sector of Kurdistan Region. AL-Anbar University journal of Economic and Administration Sciences, 13(2), 151-170.

Saeed, A., & Sameer, M. (2017). Impact of board gender diversity on dividend payments: Evidence from some emerging economies. International Business Review.

Tahir, M., & Mushtaq, M. (2016) Determinants of Dividend Payout: Evidence from listed Oil and Gas Companies of Pakistan. The Journal of Asian Finance, Economics and Business, 3 (4), 25-37.

Torlak, N. G., Demir, A., & Budur, T. (2021). Decision-making, leadership and performance links in private education institutes. Rajagiri Management Journal. Doi:10.1108/RAMJ-10-2020-0061.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. John Wiley & Sons.

Visits: 102