This paper seeks to find the determinants of dividend policy of the firms in Kuwait Stock Exchange (KSE). The study uses a firm-level panel data set of publicly traded firms on the Stock Exchange between 2011 and 2014. Three determinants have been employed (company size, profitability and financial leverage) and the data analyzed within the framework of OLS regression technique. The results show that the dividend policy in KSE Market is positively affected by leverage and risk and are positively affected by profitability, and company size. Consequently, the major determinants of dividend policy of the firms in KSE are profitability, leverage, level of risk and size. In all, the study found support for the profitability theory and agency cost theory, therefore, the determinants of dividend policy that are suggested by research in developed markets can be applied in developing market as well.
Keywords: Dividend Policy; Company size; Profitability; Financial leverage; Kuwait Stock Exchange.
