Relationship between Firm Age and Financial Leverage with Dividend Policy

Abstract

In this study, the effect of the financial leverage the age of the company on the policies of the profit distribution of the company has been investigated. In this case, two hypotheses have been developed. In the first hypothesis, the effects of the age of the company and also in second hypothesis the effects of the financial leverage on the policies of profit distribution of the company have been investigated. Sample firms are the manufacturing companies accepted in Tehran Stock Exchange (TSE) over the period from 2005 to 2011. In order to determine the sample firms, systematic sampling has been used and finally 92 companies have been selected. To investigate the linear or non-linear relationship between company age and dividends, the square and the cube of the company age in empirical model of the research have been used. The results indicate a positive and significant relationship between company age and dividend ratio, but a negative and significant association between financial leverage and dividend.