Signalling and Lifecycle Theories in the Banking Sectors of GCC Frontier Markets: An Empirical Assessment

This paper tests the signaling and lifecycle theories of dividend announcements for banking sectors of the frontier markets in Gulf Corporation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar). Few existing studies have analyzed the dividend lifecycle and signaling hypotheses related to these economies, and the current paper thus contributes to the empirical literature from this perspective. Using event study and regression analysis, the results confirm that dividends tend to support the lifecycle hypothesis rather than signaling theory in the frontier markets of GCC. Such evidence for banking firms is rare in the literature, and the specific contribution of our study is a detailed comparative investigation of the dividend policies of the banking sectors in frontier markets.