The relationship between dividend policy, financial structure, profitability and firm value

Abstract

This paper investigates the value creation process in the Tunisia stock exchange using a sample including more than 90% of the listed companies. In order to find out the determinants of the value creation of the selected companies, it uses the random probit model estimation procedure with unbalanced panel data. The results indicate that the probability of creating future values is positively and significantly correlated with profitability factor. In addition, the results also suggest that the value creation is affected by industry patterns (listed banks are the more value creator in the Tunisia stock exchange), by size (the probability to create value is stronger in small firms than in big ones) and by nature of property (the probability to create value is stronger in private-owned firms than in public-owned ones). Last but not least, the time trend factor is positive and highly significant. This finding suggests that the progressive reforms of the Tunisian stock exchange have attracted new investors, who have contributed by their purchase to the appreciation of the value of listed shares.