The Role of Financial Analysis in Enhancing the Relationship between Dividend Distributions and Market Value of Shares in Commercial Banks : Applied Study

Abstract

The study aims to test the relationship between the profit distribution policy and the market value of shares of commercial banks published in the Iraqi Stock Exchange by using the financial analysis ratios (MV and DRP) which reflect the market value of shares and dividends. This relationship was examined by testing the results of (5) commercial banks for the period (2011-2015). The results of the analysis showed a strong statistical significance between the distributed profits and the market value of the shares in the commercial banks, as it became clear that there is a direct relationship to increase the market value of the shares in case of increasing the dividends distributed to shareholders. The study also recommended that the interest of the joint stock companies in general and the commercial banks in particular should strengthen the relationship between the management and the financial analysts because they have a clear effect in determining the relationship between all the financial elements including the value of the shares.

Keywords

The study aims to test the relationship between the profit distribution policy and the market value of shares of commercial banks published in the Iraqi Stock Exchange by using the financial analysis ratios, MV and DRP which reflect the market value of shares and dividends. This relationship was examined by testing the results of, 5 commercial banks for the period, 2011-2015. The results of the analysis showed a strong statistical significance between the distributed profits and the market value of the shares in the commercial banks, as it became clear that there is a direct relationship to increase the market value of the shares in case of increasing the dividends distributed to shareholders. The study also recommended that the interest of the joint stock companies in general and the commercial banks in particular should strengthen the relationship between the management and the financial analysts because they have a clear effect in determining the relationship between all the financial elements including the value of the shares.