Exploring the Nexus between Profitability, Dividend Policy and Share Prices in Kuwaiti Insurance Companies

Abstract

The purpose of this study is to investigate the impact of dividend policy and profitability ratios on the share prices of insurance companies listed on Kuwait Stock Exchange (KSE) between 2014 and 2022. The study's findings demonstrated that 42.4% of share prices could be explained by factors related to profitability and dividend policy. Earnings per share (EPS) was the only variable that demonstrated a significant direct relationship with share prices when the individual effects of each variable were examined. While dividend payout ratio (DPR) exhibited a negative correlation with stock prices, it was not statistically significant. Other characteristics that were considered included dividend yield (DY) and interest rate (IR), both of which showed significant inverse relations. This study concludes that investors in Kuwait Stock Exchange (KSE) shares of the insurance sector favor unpredictable future capital gains over more assured dividends.