PROFITABILITY BEHAVIORAL PERSPECTIVE AND THE EXPECTED RETURN ON SHARES OF COMPANIES LISTED ON THE TEHRAN STOCK EXCHANGE: EXAMINATION AND ANALYSIS

Abstract

Since increasing shareholders' capital has long been promoted as the main goal of business entities, they are expected to achieve this by obtaining a solid return. Return on investment is often devised as a driving force that motivates and incentivizes investors. The purpose of this study was to examine the role of dividends in the expected returns of companies listed on the Tehran Stock Exchange during the Persian fiscal years corresponding to 2014-2018. To this end, 96 companies listed on the Tehran Stock Exchange were selected using systematic elimination sampling. Multivariate regression analysis based on panel data was implemented in EViews environment to estimate the research model. To distinguish whether the data was best fitted to the panel (longitudinal) or pooled (mixed) model, the F-Limer test was used, and hence the results indicated the suitability of the panel model; Hausman test was pursuantly used to establish whether the model was that of fixed effects or random effects. The research model was randomly estimated. The findings from estimating the research model indicated that, at a significance level of 10%, dividends have an inverse and statistically significant effect on the expected return of shares. The subject of dividends and profit-sharing policies has always been one of the most debated topics in financial science.