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Baker, H. Kent, and Rob Weigand. "Corporate dividend policy revisited." Managerial Finance 41, no. 2 (February 9, 2015): 126–44. http://dx.doi.org/10.1108/mf-03-2014-0077.
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Purpose – The purpose of this paper is to provide an overview and synthesis of some important literature on dividend policy, chronicle changing perspectives and trends, provide stylized facts, offer practical implications, and suggest avenues for future research. Design/methodology/approach – The authors provide a survey of literature surveys with a focus on insights for paying cash dividends. Findings – The analysis of literature surveys on dividend policy provides some stylized facts. For example, US evidence indicates that the importance of cash dividends as a part of investors’ total returns has declined over time. Share repurchases now play an increasingly important role in payout policy in countries permitting stock buybacks. The popular view is that dividend policy is important, as evidenced by the large amount of money involved and the attention that firms, security analysts, and investors give to dividends. Firms tend to follow a managed dividend policy rather than a residual dividend policy, which involves paying dividends from earnings left over after meeting investment needs while maintaining its target capital structure. Certain determinants of cash dividends are consistently important over time in shaping actual dividend policies including the stability of past dividends and current and anticipated earnings. No universal set of factors is appropriate for all firms because dividend policy is sensitive to numerous factors including firm characteristics, market characteristics, and substitute forms of dividends. Universal or one-size-fits-all theories or explanations for why companies pay dividends are too simplistic. Practical implications – The dividend puzzle remains an important topic in modern finance. Originality/value – This is the first a survey of literature surveys on cash dividends.
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Hauser, Richard, and John H. Thornton Jr. "Dividend policy and corporate valuation." Managerial Finance 43, no. 6 (June 12, 2017): 663–78. http://dx.doi.org/10.1108/mf-05-2015-0157.
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Purpose The purpose of this paper is to investigate an empirical solution to dividend policy relevance. Design/methodology/approach The paper combines measures of firm maturity in a logit regression to define a comprehensive life-cycle model of the likelihood of dividend payment. The valuation of firms that conform to the model is compared to the valuation of firms that do not fit the model. Valuation is measured by the market to book (M/B) ratio. Findings The analysis indicates that dividend policy is related to firm value. Dividend-paying firms that fit the life-cycle model have a higher median valuation than dividend-paying firms that do not fit the life-cycle model. Similarly, non-paying firms that fit the life-cycle model have a higher median valuation than non-paying firms that do not fit the life-cycle model. The results also provide evidence that the disappearing dividend phenomenon is related to shifts in valuation. Research limitations/implications This paper focuses on the payment of dividends. Stock repurchases are not considered. Practical implications The results indicate that dividend policy is related to firm value. Approximately 15 percent of sample observations have a dividend policy counter to the life-cycle model. Originality/value This paper shows that the relation between a firm’s M/B ratio and dividend policy changes over the firm’s life-cycle. It also shows that the catering motive for dividends is strongest among firms that are outliers in the life-cycle model and firms of intermediate maturity.
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Akhigbe, Aigbe, and Jeff Madura. "Dividend Policy and Corporate Performance." Journal of Business Finance & Accounting 23, no. 9-10 (December 1996): 1267–87. http://dx.doi.org/10.1111/1468-5957.00079.
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Saravanakumar, S. "Determinants of Corporate Dividend Policy." Asia Pacific Business Review 7, no. 2 (April 2011): 25–36. http://dx.doi.org/10.1177/097324701100700203.
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Setiawan, Doddy, and Lian Kee Phua. "Corporate governance and dividend policy in Indonesia." Business Strategy Series 14, no. 5/6 (September 2, 2013): 135–43. http://dx.doi.org/10.1108/bss-01-2013-0003.
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Purpose – This study aims at examining the impact of corporate governance on dividend policy among Indonesian companies. There are two theories of the effect of corporate governance on dividend policy: substitution and outcome theory. Substitution theory argue that corporate governance have negative effect on dividend policy, while outcome theory argue that corporate governance have positive effect on dividend policy. Therefore, this study investigates the effect of corporate governance on dividend policy in Indonesia. This study aims at examining the impact of corporate governance on dividend policy among Indonesian companies. There are two theories of the effect of corporate governance on dividend policy: substitution and outcome theory. Substitution theory argue that corporate governance have negative effect on dividend policy, while outcome theory argue that corporate governance have positive effect on dividend policy. Therefore, this study investigates the effect of corporate governance on dividend policy in Indonesia. Design/methodology/approach – The sample of this research comprises 248 firms from Indonesian Stock Exchange during 2004-2006. This research using Transparency and Disclosure Index (TDI) to measure corporate governance in Indonesia Findings – We find that TDI are low among Indonesian firms, with a score of 32 per cent out of the maximum point. This score indicates that Indonesian corporate governance is still low. The results show that there is a negative relation between corporate governance and dividend policy in Indonesia. Thus, the Indonesian companies pay more dividends when corporate governance practice is low. This result confirms applicable of substitution theory in Indonesia. Research limitations/implications – This research focuses on manufacturing industry in Indonesia. Therefore, the conclusions of this research apply on the manufacturing companies in Indonesia Practical implications – This research shows that companies with poor corporate governance pay dividend higher than companies with better corporate governance. Thus, investor can use this information to make investment decision. Originality/value – This research provides evidence on the negative effect of corporate governance on dividend policy in Indonesia (substitution theory).
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Anderson, Mark, Muhammad Kabir, Harun Rashid, and Hussein Warsame. "Corporate Dividend Policy and Tax Avoidance." Canadian Tax Journal/Revue fiscale canadienne 70, no. 4 (2022): 747–84. http://dx.doi.org/10.32721/ctj.2022.70.4.anderson.
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This article investigates the relation between corporate dividend policy and tax avoidance. The payment of dividends facilitates the transfer of corporate resources, usually cash, from the company to its shareholders. An important aspect of dividend policy is that it is used to address agency problems between shareholders and managers associated with free cash flow. Given that a dividend payment policy is generally considered to be a fixed commitment, and managers may be penalized for cutting dividends, managers may adopt a tax-avoidance strategy to generate additional cash flow to meet this obligation and to fund operating and investment needs. Using data for US publicly listed corporations, we first document that a higher dividend payout ratio is associated with a lower cash-payment-based effective tax rate and a higher book-tax difference, indicating a higher level of tax avoidance. We then test whether tax avoidance increased with the initiation of dividends that occurred in response to the 2003 US dividend income tax cut, and find that it did. The results support our prediction that dividend policy affects tax planning. We employ a Heckman two-stage procedure to address other endogeneities. We also show that our baseline results are robust when an extensive set of tests is applied, including alternative measures of tax avoidance and dividend payout. In addition, we find that the relation between dividend payout and measures of tax avoidance is stronger for firms that experience a non-trivial increase in the dividend payout ratio and that have low institutional ownership, high leverage, and low operating cash flow. Overall, our findings provide persuasive evidence that dividend policy affects the distribution of surplus among shareholders, managers, and the tax authority.
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Pan, Lee-Hsien, Thomas Barkley, and Shaio-Yan Huang. "Corporate Payout Policy and CEO Compensation Structure." International Journal of Accounting and Financial Reporting 8, no. 2 (April 25, 2018): 179. http://dx.doi.org/10.5296/ijafr.v8i2.13280.
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This paper examines how corporate payout policy is affected by CEO compensation structure using data from more than 1,600 firms during 1992-2006. Specifically, it studies the effects of CEO compensation structure, firm characteristics, and dividend payout policies on dividend type and relative dividend size.It finds CEO salary is positively associated with cash dividends, share repurchases, and relative dividend size whereas CEO salary (compared to bonus) as a percentage of total compensation has negative effects on cash dividends and share repurchases. It also discovers CEO stock awards as a percentage of total compensation are positively associated with share repurchases and CEO option awards are negatively related to cash dividends.In addition, this paper shows larger firms and firms with more free cash flow distribute more cash dividends and share repurchases. On the other hand, firms with higher leverage ratio and more investment opportunities prefer to save earnings for future re-investment projects. Finally, it show dividend payout policy (either cash dividends or share repurchases) increases relative dividend size. The results of this study suggest that CEO compensation components affect CEOs’ dividend payout decisions: when CEOs’ stock award increases, they prefer to use share repurchases; when CEOs’ option award increases, they prefer not to use cash dividends.
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Konieczka, Przemysław, and Adam Szyszka. "Do Investor Preferences Drive Corporate Dividend Policy?" International Journal of Management and Economics 39, no. 1 (October 17, 2014): 70–81. http://dx.doi.org/10.2478/ijme-2014-0022.
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Abstract This research paper aims at assessing whether managers adapt their dividend policies to the changing preferences of investors, as predicted by the catering theory of dividends. To answer this question, we used an modified approach based on the method proposed by Baker and Wurgler [2004a] in their studies on dividend catering. We noted a systematic decline in percentage of companies that paid out dividends in a sample of American publicly-traded companies, excluding companies of low capitalization and low profitability. Next, we observed a parallel declining tendency in dividend premiums in our sample. The decrease in the readiness to pay out dividends among companies on the American market can be linked to the fact that investors have assigned less weight to dividends over the years, and so in turn they were less willing to reward dividend-paying companies with higher valuations. Periodic fluctuations in investor mood with regard to dividend-paying companies, and the resulting changes in their relative valuation, influence the propensity of managers to pay out dividends. We showed a statistically significant relationship between changes in dividend premiums in one year, and the proportion of companies that paid out dividends in the following year. Additionally, it looks like companies try to compensate shareholders by paying out dividends in years of worse performing market and are less likely to distribute their earnings when shareholders gain on rising stock price. We found a negative correlation between the change in proportion of companies paying out dividends and changes in the S&P500 index. However, this does not seem to reflect investor preferences and taste for dividends. We found no statistically significant correlations between the change of the dividend premium and changes in the S&P500 index and, surprisingly, we observed relatively worse valuation of dividend-paying frms in years of market downturn. In terms of originality, our work contributes to the ongoing dividend puzzle discussion in a number of ways. First, we use a sample of American companies after excluding small capitalization stocks. Second, we assume a time lag between a shift in investor preferences and a change in corporate payout policy. Finally, our studies also account for the impact of general market conditions on dividend decisions.
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Oh, Hyunmin, and Sambock Park. "Corporate Sustainable Management, Dividend Policy and Chaebol." Sustainability 13, no. 13 (July 5, 2021): 7495. http://dx.doi.org/10.3390/su13137495.
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This study empirically examines the relationship between corporate sustainable management (CSM) and dividend policy. Among the various motivations related to dividends, this study examines the relationship between CSM and dividend policy based on the agency and signaling theory. After examining the relationship between CSM and dividend policy, we investigate whether belonging to a large business group (chaebol group) has a significant effect on the relationship between CSM and dividend policy. The analysis period is from 2011 to 2018, and the ESG ratings of the Korea Corporate Governance Service are used as proxies for CSM. The empirical results show that CSM and dividends have a significant relationship in the positive direction. This means that firms with excellent CSM activities have higher dividend levels than those that do not. Furthermore, the association between CSM and dividends is more negative for firms belonging to a chaebol group. This indicates that the positive relationship between CSM and dividends in a firm that belongs to a chaebol group is weakened. This means that the relationship between CSM and dividends in the group belonging to the chaebol group is weakened. It belongs to the group of conglomerates, meaning that the relationship between the amount of dividends and CSM weakened. Our study focuses on CSM as a determinant of dividends, and examines the effects of belonging to a chaebol group in the relationship between CSM and dividends. Given that resolving the interest incompatibility between investors and managers is the focus of corporate governance, dividend policies can be used as a method for resolving the interest incompatibility between investors and managers.
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Cheung, Adrian Waikong, May Hu, and Jörg Schwiebert. "Corporate social responsibility and dividend policy." Accounting & Finance 58, no. 3 (October 5, 2016): 787–816. http://dx.doi.org/10.1111/acfi.12238.
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Benlemlih, Mohammed. "Corporate social responsibility and dividend policy." Research in International Business and Finance 47 (January 2019): 114–38. http://dx.doi.org/10.1016/j.ribaf.2018.07.005.
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Kao, Chihwa, Cheng F. Lee, and Chunchi Wu. "Rational expectations and corporate dividend policy." Review of Quantitative Finance and Accounting 1, no. 3 (July 1991): 331–48. http://dx.doi.org/10.1007/bf02408384.
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Singhania, Monica. "Taxation and Corporate Payout Policy." Vikalpa: The Journal for Decision Makers 31, no. 4 (October 2006): 47–66. http://dx.doi.org/10.1177/0256090920060404.
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This study examines the dividend trends of 590 Indian companies over the period 1992–2004 of all manufacturing, non-government, non-financial, and non-banking companies listed on BSE for which there was no missing financial information over the period of the study. Dividend payout has been chosen for the purpose of examining the impact of taxation on dividend policy. Analysis was done for the full period under consideration, immediate one year of tax regime change, and immediate three years of tax regime change so as to conclusively establish the results and also to note the variations in results over different time frames, if any. For the purpose of this study, the sample was classified on the basis of dividend history, industry, and size. Of the 590 companies, 240 companies were regular payers—the companies that had paid dividend regularly without ever skipping the payments throughout the period of the study. According to tax preference or trade-off theory, favourable dividend tax should lead to higher payouts. The Union Budget of 1997 made dividends taxable in the hands of the company paying them and not in the hands of the investors receiving them. The corporate dividend tax aimed at improving the economic growth and flexibility by eliminating the tax bias against equity-financed investments thereby promoting saving and investment. The new system aimed at reducing the tax bias against capital gains in the earlier tax system, encouraging investment, and enhancing the long-term growth potential of the Indian economy. As compared to the earlier tax regime where the recipient shareholder paid the tax on the dividend received primarily on the basis of marginal tax slab rate applicable to him/her (varying between 0% to 30%), in the current structure of corporate dividend tax, the dividend paying companies pay dividend tax at a flat rate of 12.5 per cent as of financial year 2005–06. Implicitly, the present corporate dividend tax regime can be termed as a more favourable tax policy. The analysis of influence of changes in the tax regime on dividend behaviour reveals the following: Trade-off or tax preference theory does appear to hold true in the Indian context in the case of both the total sample companies as well as the regular payers. While in the case of total sample companies, the results are significant for the entire period of study and the immediate three year period, in case of regular payer, the results are significant for all the three time periods analysed. Though the results are somewhat mixed, it can be largely inferred that there is a significant difference in average dividend payout ratio in the two different tax regimes. There are wide industry-wise and size-wise variations in empirical findings visible over the period of study.
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Booth, Laurence, and Jun Zhou. "Market power and dividend policy." Managerial Finance 41, no. 2 (February 9, 2015): 145–63. http://dx.doi.org/10.1108/mf-12-2013-0346.
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Purpose – The purpose of this paper is to investigate how and why a firm’s product market power affects its dividend policy. Design/methodology/approach – This paper uses three measures of market power? The degree of import competition, Herfindahl-Hirschman index, and Lerner Index? To examine how a firm’s product market power affects its dividend policy. Further, it proposes and tests a risk-based explanation for this impact. Findings – This paper shows that market power positively affects the dividend decision, in terms of both the probability of paying a dividend and the amount of dividend payment. It also provides evidence that the route through which market power affects the dividend decision is business risk: firms with less market power are riskier and hence less likely to pay dividends than firms with more market power. Practical implications – The results show that product market power may have played an important role in reshaping dividend policy of corporate America. Originality/value – This study documents the relevance of market power behind dividend policy and therefore adds to the knowledge on the relationship between product markets and corporate financial policies, which is an important and understudied area of corporate finance.
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Abdel-Wanis, Eman. "Corporate Social Responsibility, Corporate Life Cycle, and Dividend Policy." Journal of Accounting, Business and Management (JABM) 27, no. 2 (October 23, 2020): 101. http://dx.doi.org/10.31966/jabminternational.v27i2.703.
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The aim of this paper is to investigate the impact of corporate social responsibility(CSR) on dividend policy through corporate life cycle (CLC) as a mediator using pathanalysis for 308 firms-observation for 80 non-financial firms during the period from 2014to 2017 using smart PLS (partial least square). This paper explores the impact of the socialresponsibility on the dividends policy and explores the role of each life cycle in this effecton dividends. The results show that firms in their growth stage are positively associatedwith CSR, while firms in stage of decline are less likely to invest in CSR. High CSR firmsmay use dividend policy to reduce the agency problems related to overinvestment in CSR.Results refer to corporate life cycle isn't influenced by dividends. The results show thatcorporate life cycles play an important role in enhance the relationship CSR and dividendpolicy especially in the growth stage in in the Egyptian business environment
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Yarram, Subba Reddy, and Brian Dollery. "Corporate governance and financial policies." Managerial Finance 41, no. 3 (March 9, 2015): 267–85. http://dx.doi.org/10.1108/mf-03-2014-0086.
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Purpose – The purpose of this paper is to examine the influence of board structure on dividend policy of Australian corporate firms. It also considers the traditional explanations of corporate dividend choice, such as agency cost theory, signalling hypothesis, the life cycle hypothesis along with tax-based explanations of dividend policy. Design/methodology/approach – The final sample consists of 413 non-financial firms that are part of the All Ordinaries Index. The causal analysis was undertaken in three stages. In the first stage, the authors analyse the likelihood of paying dividends. And classify all firms as either dividend payers or non-payers. The authors then model this binary variable as a function of different sets of variables. In the second stage, the authors analyse the factors determining the magnitude of dividend payout by those firms that have paid a dividend. In contrast, stage three employs all firms – those which did not pay any dividend and those firms which paid a dividend. Findings – For the study period 2004-2009, this study finds that board independence has a significant positive influence on the dividend payout of Australian firms. This finding is consistent with the “outcome” model of La Porta et al. (2000). This study also finds that size has a significant positive influence on the dividend payout of Australian firms thus providing support for the agency cost view of dividend policy. Similarly, this study also finds support for the signalling hypothesis and the life cycle theory given the significant positive influence of profitability and the significant negative influence of current losses and growth opportunities on the dividend policy of Australian firms. Research limitations/implications – The findings of the study are robust with to alternative measures of variables employed and are not influenced by the global financial crisis. However, this study did not consider the possible endogenous and multiple relationships between dividends, debt, profitability, cash holdings and governance structures given the limited study period considered. Practical implications – This study finds that board independence has a significant positive influence on the dividend behaviour of Australian firms. This suggests that dividends and independent directors play complementary governance roles. While dividends provide the monitoring and disciplinary roles, independent directors act as catalysts for enhancing effective board functioning. These findings have implications for corporate governance policies and the payout policies. Originality/value – Though the governance role of dividends has long been recognized in the literature (Easterbrook, 1984; Jensen, 1986), very few studies analyse the influence of board characteristics on the decision to pay dividends in Australia. Given the distinct Australian setting where the tax imputation system allows companies to pay franked dividends to domestic investors, this study provides evidence on the interaction of corporate and dividend policies. This study finds that dividend polices are influenced by percentage franking of dividends. This study also finds that board independence has a significant positive influence on the dividend policy of Australian firms.
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Antonius Siahaan, Yosman Bustaman, and Indah Larisa Sari. "Ownership Concentration, Corporate Liquidity, and Dividend Payment Policy: Evidence from Indonesian Financial Industries." International Journal of Business and Society 21, no. 3 (April 27, 2021): 1310–21. http://dx.doi.org/10.33736/ijbs.3351.2020.
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The main objective of this research is to analyze the effect of ownership concentration and corporate liquidity on dividend payment policy in the Indonesian financial industry. Dividend payment is measured using dividend pay-out ratio on measuring dividend payment. Corporate ownership concentration is measured using the number of shares held by legal individual investors and large block shareholders. Ownership concentration is divided into three categories, which are inside shareholders, stable shareholders, and market shareholders. Corporate liquidity is measured by corporate profit, defined by retained earnings/total assets and retained earnings/total equity, corporate leverage (total liabilities/total assets), and corporate size (log normal total assets). We apply data panel regression and the robust least square method. Based on the robust least square method of testing data panel regression, we find there is a relationship between insider shareholder, market shareholder, and dividend payment policy. In contrast, there is no relationship between stable shareholder and dividend payment policy. We also found a relationship between corporate profit, which variable is retained earnings/total assets, corporate leverage, and corporate size, and dividend payment policy. These results lead to the conclusion that dividend payments increase when ownership by inside shareholders decreases, and that when ownership by market shareholders increase corporate profit will also increase, and corporate leverageand corporate size decreases.
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Bushra, Aliya, and Nawazish Mirza. "The Determinants of Corporate Dividend Policy in Pakistan." LAHORE JOURNAL OF ECONOMICS 20, no. 2 (July 1, 2015): 77–98. http://dx.doi.org/10.35536/lje.2015.v20.i2.a4.
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The objective of this study is to identify the significant determinants of firms’ dividend policy across different sectors in Pakistan. Using data on 75 companies listed on the KSE 100 index for the period 2005 to 2010, we find that profitable firms tend to give higher dividends than loss-making firms. Firm size has a negative relationship with the dividend payout ratio and dividend yield, indicating that, the larger the firm, the more likely it is to retain cash to pay off its liabilities. Growth in sales is positively related to dividend yield, whereby an increase in sales leads to higher profitability and higher dividend payments. Ownership concentrated within institutions (such as banks and insurance companies), the management/family, and individuals has a negative impact on the payout ratio. Institutional owners are more likely to retain excess cash and thus omit dividends, individual owners prefer capital gains to dividends given the tax deduction, and management- or family-owned firms avoid dividends, which lead to increased agency problems. Finally, the market-to-book ratio is negative and highly significant: firms with better growth opportunities rely on internal financing more than on generating external funds.
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Rój, Justyna. "The Determinants of Corporate Dividend Policy in Poland." Ekonomika 98, no. 1 (April 17, 2019): 96–110. http://dx.doi.org/10.15388/ekon.2019.1.6.
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The purpose of this research is to examine the factors that determine the dividend policy of non-financial firms listed on the Warsaw Stock Exchange (WSE) in Poland and that of the annually paid dividends. Up to now, many empirical studies related to dividend policy were carried out, showing the differentiation of factors affecting the dividend policy and their interaction. Thus, with this study, it would be possible to give a view on the dividend policy of corporations listed on the WSE for the period from 2008 to 2016. The study covers non-financial companies listed on the WSE in Poland. The Tobit regression is used to identify the impact of factors influencing the companies’ distribution of dividends. The variables that may explain a firm’s dividend decision and that were used in this study are selected based on the theory and available empirical researches and then also determined by data availability. These are profitability, investment opportunities, measures of size, leverage, and liquidity. As a result of this study, the factors that determine the dividend policy of companies were verified in the context of the companies listed on the WSE. Moreover, it indicates which of the existing theories on dividend policy could be applied to the capital markets of Poland. Thus, it provides new insights into the theory of dividend policy.
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Smith, Frank S., Victor Puleo, and K. Michael Casey. "Dividend policy and corporate governance: a research note." Corporate Ownership and Control 5, no. 3 (2008): 220–24. http://dx.doi.org/10.22495/cocv5i3c1p6.
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This paper explores the relationship between a firm’s dividend payment and an external perception of whether the firm exercises good corporate governance. Consistent with an agency explanation of dividend payout, we find that firms with higher corporate governance scores do pay lower dividends. The reduced cost associated with not seeking external funds as often as firms with higher dividends can be listed as a benefit for firms seeking to be known as better corporate citizens.
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Kuzucu, Narman. "A Survey of Managerial Perspective on Corporate Dividend Policy." International Journal of Research in Business and Social Science (2147-4478) 4, no. 2 (April 22, 2015): 1–19. http://dx.doi.org/10.20525/ijrbs.v4i2.22.
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This research paper examines the corporate dividend payout behaviors of non-financial firms from Istanbul Stock Exchange (Borsa Istanbul). Survey method is conducted to investigate managerial views on corporate dividend policy. The study investigates whether the evidence in Turkish stock market on dividend policy is similar to the European and the U.S. firms’ results which are reported earlier by other studies, and moreover in what extent Lintner’s (1956) findings on dividends is supported by today’s listed firms in an emerging market. The financial managers from 38 firms out of 216 non-financial companies responded the survey. The results show that there is a significant positive relationship between cash dividends and earnings. Earnings are viewed as the most important factor in dividend decision like in European and the U.S. firms. Sustainable change in earnings, stability and level of future earnings, and the desire to distribute a proportion of earnings to shareholders are the common determinants of dividend policy. The majority of the respondents reports that they target dividends. Dividend yield is the most common measure for dividend targeting. Share repurchases are not viewed as alternative to dividend payouts unlike the U.S. firms. The study finds supporting evidences for bird-in-the-hand and signaling hypotheses, and Lintner’s model.
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Al-Najjar, Basil, and Erhan Kilincarslan. "Corporate dividend decisions and dividend smoothing." International Journal of Managerial Finance 13, no. 3 (June 5, 2017): 304–31. http://dx.doi.org/10.1108/ijmf-10-2016-0191.
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Purpose The purpose of this paper is to investigate the impact of regulations, reforms and legal environment on dividend policy in a different institutional setting. Particularly, it examines the firm-level cash dividend behaviour of publicly listed firms in Turkey in the post-2003 period, since there were major economic and structural reforms as well as significant regulatory changes of dividend payout rules imposed by the supervisory bodies. Design/methodology/approach The paper focuses on a recent large panel data set of 264 Istanbul Stock Exchange (ISE)-listed firms over a ten-year period 2003-2012. First, it employs a modified specification of Lintner’s (1956) partial adjustment model for analysis regarding target payout ratio and dividend smoothing. Second, it performs a logit model for analysis in identifying the link between financial characteristics and the likelihood of paying dividends. Findings The results show that ISE firms now follow the same determinants as suggested by Lintner. They, indeed, have long-term payout ratios and adjust their cash dividends by a moderate level of smoothing, and therefore adopt stable dividend policies (although less stable policies compared to their counterparts in the developed US market) as a signalling mechanism over the period 2003-2012. Moreover, the results also report that ownership structure concentration affects the target payout ratio and dividend smoothing in the Turkish market. In addition, the results further show that more profitable, more mature and larger sized ISE firms are more likely to pay cash dividends, whereas ISE firms with higher investment opportunities and more debt are less likely to distribute cash dividends in the post-2003 period. Originality/value To the best of authors’ knowledge, this paper is the first major research that examines the implications of reforms and regulations on cash dividend payments and dividend smoothing over time in Turkey during its market integration process in the post-2003 period.
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Saldi, Wardah Awwalin Ikhsaniah, Fajri Adrianto, and Masyhuri Hamidi. "Esg and Dividend Policy in Indonesia." Journal of Social Research 2, no. 3 (February 8, 2023): 724–34. http://dx.doi.org/10.55324/josr.v2i3.596.
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The purpose of this paper is to determine the effect of environmental, social and corporate governance (ESG) performance on company dividend policy in Indonesia. This paper uses three controlled variables: firm size, firm age, and firm leverage. The data used in this research are secondary data from Thomson Reuters Eikon Database on 17 companies listed on the Indonesian Stock Exchange over 2011-2020. To analyze the data, this research uses Panel Data Regression Analysis with Common Effect Model aided by STATA 17. The results show that Environmental, Social and Corporate Governance performance has a positive and significant effect on company dividend policy in Indonesia. This paper adds value to the existing literature as it provides an overview of the impact of Environmental, Social and Corporate Governance, especially in relation to the performance of companies Indonesia. It can therefore provide a good basis for understanding of how Indonesian companies can be more appealing to investors.
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Mahenthiran, Sakthi, David Cademartori, and Tom Gjerde. "Mandatory Dividend Policy, Growth, Liquidity and Corporate Governance: Evidence from Chile." Review of Pacific Basin Financial Markets and Policies 23, no. 03 (July 23, 2020): 2050025. http://dx.doi.org/10.1142/s0219091520500253.
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Chilean publicly listed companies are required by law to pay out a minimum 30% of distributable earnings after taxes as dividends on common stock. The study extends Lintner’s [Lintner, J (1956). Distribution of incomes of corporations among dividend retained earnings and taxes. American Economic Review, 46, 97–113.] model of dividend smoothing and Banerjee [Banerjee, S, VA Gatchev and PA Spindt (2007). Stock market liquidity and firm dividend policy. Journal of Financial and Quantitative Analysis, 42(2), 369–398.] logistic model of the likelihood of a firm paying a dividend to investigate the signaling, liquidity, corporate governance, and information risk-based theories of dividends. The results show that Chilean firms’ excess dividends are smoothed in relation to the prior period level of excess dividends, and lagged earnings do not drive excess dividends even though the mandatory minimum dividend is defined in terms of lagged earnings. This insight establishes that dividend decisions regarding the size of the excess dividend and the likelihood of paying an excess dividend are distinct from the mandatory dividend payment. Additionally, the size of excess dividends and their likelihood are higher at firms with higher growth opportunities, a result consistent with the use of excess dividends as a signaling device. Results also demonstrate that greater transparency is associated with a greater likelihood of paying an excess dividend, but transparency does not drive policy regarding the size of the excess dividend. Moreover, the corporate governance mechanism creditor monitoring influences the size of excess dividends but not the likelihood of paying excess dividends. These results have implications for securities regulators evaluating the pros and cons of a mandatory dividend policy to protect minority shareholders in emerging markets.
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Zagonel, Timóteo, Paulo Renato Soares Terra, and Diogo Favero Pasuch. "Taxation, corporate governance and dividend policy in Brazil." RAUSP Management Journal 53, no. 3 (July 9, 2018): 304–23. http://dx.doi.org/10.1108/rausp-04-2018-006.
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Purpose This study aims to analyze the influence of taxes and corporate governance on the dividend policy of Brazilian companies. Design/methodology/approach The authors identify the changes of the tax legislation in Brazil in the period 1986-2011 and check their effect on corporate dividend policies for preferred and common shares. The authors use panel data Probit and Tobit estimation to verify the probability of companies to pay dividends under different tax regimes. The final sample comprises 672 companies, 1,159 traded stocks and 30,134 observations Findings The authors’ results suggest that changes in the tax legislation have a significant influence on dividend payments. Also, firms do not follow target payout ratios, but dividends are moderately dependent on past payments. Dividend payouts are affected by stock voting rights, privatization and dividend deductibility. Changes in regulation that reduce the agency problems among shareholders affect positively payout ratios. Practical implications For managers, maximizing shareholders’ value requires taking into account the consequences of the taxation when designing financial policies for the firm. For investors, stock portfolio selection should take into account payout behavior and how changes in dividend taxation affect stocks’ value. For policymakers, the effects of changes in the tax code on corporate behavior are of utmost importance to stimulate private investment and economic growth. Originality/value There are several tax law changes in Brazil within the period analyzed, creating a good opportunity to study the effect of taxation on dividend policy and its dynamics over time.
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Huffman, Stephen Phillip. "Dividend Policy, Shareholder Rights, and Corporate Governance." CFA Digest 37, no. 4 (November 2007): 10–12. http://dx.doi.org/10.2469/dig.v37.n4.4858.
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Patra, Theophano, Sunil Poshakwale, and Kean Ow-Yong. "Determinants of corporate dividend policy in Greece." Applied Financial Economics 22, no. 13 (March 12, 2012): 1079–87. http://dx.doi.org/10.1080/09603107.2011.639734.
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Lestari, H. S. "Determinants of corporate dividend policy in Indonesia." IOP Conference Series: Earth and Environmental Science 106 (January 2018): 012046. http://dx.doi.org/10.1088/1755-1315/106/1/012046.
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Koussis, Nicos, Spiros H. Martzoukos, and Lenos Trigeorgis. "Corporate liquidity and dividend policy under uncertainty." Journal of Banking & Finance 75 (February 2017): 200–214. http://dx.doi.org/10.1016/j.jbankfin.2016.11.015.
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Koussis, Nicos, Spiros H. Martzoukos, and Lenos Trigeorgis. "Corporate liquidity and dividend policy under uncertainty." Journal of Banking & Finance 81 (August 2017): 221–35. http://dx.doi.org/10.1016/j.jbankfin.2017.01.021.
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Hameed, Abdul, Farheen Zahra Hussain, Khawar Naheed, and Muhammad Sadiq Shahid. "Impact of Corporate Governance on Dividend Policy: Evidence from Pakistan." Sustainable Business and Society in Emerging Economies 3, no. 3 (September 30, 2021): 353–66. http://dx.doi.org/10.26710/sbsee.v3i3.1989.
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Purpose: The objective of the paper is to examine the impact of corporate governance on the dividend payout policy of firms listed on the Pakistan stock exchange during 2010-2020. As Pakistani investors face issues regarding their return in the shape of dividends and depend upon the firm’s corporate governance strength. To test whether changes in firm code of corporate governance have a significant influence on dividend policy.
Design/Methodology/Approach: The panel data has been used for the period 2010-2020 and panel least square has been applied. Further, to test the association, following factors such delisting risk, government tenure, political connection with institutional shareholding as many political firms hold corporate shares which influence the decision to pay dividends.
Findings: Findings from the fixed effect model show that corporate governance has a negative impact on dividend policy while government tenure, politically connected firm has a positive impact on the dividend. The study also concludes that firm size, profitability, tax, asset turnover, leverage, and firm shareholding also influence firm dividend payment behavior.
Implications/Originality/Value: The implication of study reveals that firms must focus on strong their governance and include more independent directors on the board which leads to favorable strategies regarding investors. The investor must invest in those firm where lower political connection, pay continuous dividend either high or low decease/increase delisting chances, strong corporate governance and firm specific factors also lead to make decision of dividend payment.
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Farooque, Omar Al, Ali Hamid, and Lan Sun. "Does Corporate Governance Have a Say on Dividends in Australian Listed Companies?" Australasian Business, Accounting and Finance Journal 15, no. 4 (2021): 47–75. http://dx.doi.org/10.14453/aabfj.v15i4.4.
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This paper investigates whether corporate governance has an impact on dividend policy in Australian listed firms. The empirical studies of corporate governance and dividend policy in the Australian context tend to have a limited scope and the findings are mixed. Unlike the existing literature, this paper provides a more comprehensive examination of the relationship between dividend policy and corporate governance mechanisms. Using a sample of 1,438 firm-year observations for the period of 2005 to 2011 and the panel data approach, this study finds that dividend payout is significantly positively (negatively) correlated with board size, board independence, institutional ownership and use of a Big-4 audit firm (CEO duality and managerial ownership). Moreover, dividend yield is significantly positively (negatively) correlated with managerial ownership (foreign ownership). These findings suggest that dividend policy and corporate governance mechanisms are complementary i.e. firms paying higher dividends are more likely to engage in good governance practices as well as having strong monitoring and control systems in place and therefore both dividend policy and corporate governance are considered as effective tools in reducing agency costs.
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BRAOUEZEC, YANN, and CHARLES-ALBERT LEHALLE. "CORPORATE LIQUIDITY, DIVIDEND POLICY AND DEFAULT RISK: OPTIMAL FINANCIAL POLICY AND AGENCY COSTS." International Journal of Theoretical and Applied Finance 13, no. 04 (June 2010): 537–76. http://dx.doi.org/10.1142/s0219024910005929.
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We study the simplest discrete-time finite-maturity model in which default arises when the firm is not able to pay its debt obligation using the current cash-flow plus the corporate liquidity. An important distinction is made between liquidity and solvency of the firm. The corporate financial policy is simultaneously defined by the dividend policy, and the leverage policy (the coupon and the principal of the bond). When the corporate financial policy implies no default risk and no taxes, we show that the corporate financial policy is irrelevant and this irrelevance result holds for any probability measure. When the corporate financial policy implies now some default risk, we show that the value of the firm is a piecewise decreasing function of the dividend policy for any leverage policy, so that dividend policy affects the value of the firm. However, shareholders may not always have the incentives to implement this optimal dividend policy. We show that when the value of the assets is low, shareholders have an incentive to deviate from this optimal dividend policy, and we also study the resulting agency costs. We finally compare the resulting quantities of our model to the base case suggested by Huang and Huang (2003).
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Mamikonyan, K. "DIVIDEND POLICY IN THE CORPORATE GOVERNANCE SYSTEM OF COMPANIES." Criminalistics and Forensics, no. 65 (May 18, 2020): 557–67. http://dx.doi.org/10.33994/kndise.2020.65.55.
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Over the past decade, dividend policy has become a fundamental element of the financial strategy of joint-stock companies, as it has a direct impact primarily on the corporate governance of the company. It can be considered that dividend payments are most often connected not with financial indicators, but with a significant improvement of the quality of corporate governance in the company, i.e. dividend payments are more likely an element of corporate governance. In essence, the high quality of corporate governance somewhat reduces the likelihood of making the wrong decision. To the qualitative indicators, showing the status of the company the quality corporate governance can be added for the assessment of the bankruptcy of economic entities. If the quality of corporate governance is considered as a new one, added to the composition of qualitative indicators, then in general a number of signs indicating the pre-bankrupt state of the economic entity and not reflected in the financial statements can be offered. Timely disclosure of information is accepted as the most important factor in improving corporate governance, which allows investors to reliably assess investment risks and compare practice with these results. Certain features are directly related to the structural elements of the company’s dividend policy, since contributing to the realization of the rights and interests of shareholders, the dividend policy occupies a major place in the corporate governance system of companies.
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Chang, Kiyoung, and Eun Kang. "Dividend Policy, Corporate Governance, and the Capital Markets." Journal of Finance Issues 5, no. 2 (December 31, 2007): 1–14. http://dx.doi.org/10.58886/jfi.v5i2.2607.
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This paper examines whether there is a difference between the dividend policies practiced by firms operating in countries with different financial systems, namely, bank-based and market-based systems. Our results show that the dividend payout ratio is significantly higher for bank-based countries. When firms are grouped according to whether they are in market-based countries or in bank-based countries, the level of investor protection is positively related to dividend payout in market-based financial systems but negatively related to dividend payout in bank-based fmancial systems.
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Han, Jiyeon, and Kyoung Chol Jung. "Impact of Dividend policy on Firm Valuein the Corporate Life Cycle." Academic Society of Global Business Administration 19, no. 4 (August 31, 2022): 178–208. http://dx.doi.org/10.38115/asgba.2022.19.4.178.
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This paper examines the effect of high dividend payout policy on firm value according to the corporate life cycle. For the empirical analysis, we conduct the effect of the interaction term between the corporate life cycle and the dividend payout rate measured by cash flow patterns, on Tobin's Q measured by firm value.
According to the life cycle effect of DeAngelo et al. (2006), we expect that the high dividend payout of the maturity stage will have a more positive effect on firm value than the dividend payout of companies in other life cycles. As a result of the analysis, we confirm that the high dividend payout in the maturity stage is positively associated with firm value compared to the other corporate life cycles. In the analysis, which includes dummy variables in other corporate life cycles except for the maturity stage, the dividend payout in the introduction stage and the decline stage has a lower positive effect on firm value than the dividend payout in other corporate life cycles. On the other hand, we find that the dividend payout in the growth stage has a higher positive effect on firm value than the dividend payout in other corporate life cycles.
As an additional analysis, we divide by market and find that the dividend payout at the maturity stage is positively associated with firm value compared to the other corporate life cycles in all markets. And the dividend payout at the introduction stage and decline stage is negatively associated with firm value. In addition, as a result of analyzing the dividend payout by dividing it by various measurement methods(dividend to sales, net income, equity), we find that the dividend payout of the maturity stage is positively associated with firm value compared to the other corporate life cycles.
This results imply that there is a difference in the value relevance of the dividend payout policy according to the corporate life cycle. Through this, we expect that information of the dividend payout policy effects can work differently according to the corporate life cycle.
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Chkir, Imed, and Samir Saadi. "Taxation & dividend policy: new empirical evidence." Corporate Ownership and Control 5, no. 4 (2008): 432–39. http://dx.doi.org/10.22495/cocv5i4c4p2.
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The present paper takes advantage of two important changes in the Canadian taxation of capital gains in Canada to examine the interaction between taxation and corporate dividend policy. Our empirical results suggest that Canadian firms did not increase their dividend payout after the reduction of capital gains exemption in 1987; however, they did so when the remaining $100,000 capital gains exemption in 1994 was eliminated. Moreover, we find that firms with high level of control concentration tend to pay fewer dividends. Our finding suggests taxation does influence corporate dividend policy.
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Dewi, Ni Luh Putu Sandrya. "The Effect of Debt Policy, Dividend Policy, Investment Decisions and Corporate Size on Corporate Value." International Journal of Accounting Finance in Asia Pasific 5, no. 3 (October 20, 2022): 61–68. http://dx.doi.org/10.32535/ijafap.v5i3.1886.
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Business development in the era of globalization requires all types and sectors of businesses to compete for survival. A company must implement a strategy that can improve its performance to achieve its goals. A company's value deals with the price a potential buyer would pay when the company is sold. This recent paper examines the impacts of debt policy, dividend policy, investment decisions, and corporate size on the values of IDX-listed manufacturing companies of 2018-2020. We purposively selected 69 manufacturing companies and conducted 207 observations. Research data were analyzed by a multiple linear regression test. The results suggest that debt policy, investment decisions, and company size has a partial effect on firm value. Also, dividend policy has no partial effect on company value. Keywords: Company Size, Debt Policy, Dividend Policy, Firm Value, Investment Decision.
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Kurnia, Stevani Putri, Putu Anom Mahadwartha, and Mudji Utami. "PENGUJIAN DEBT FINANCED DIVIDEND PADA PENGARUH KEBIJAKAN UTANG TERHADAP KEBIJAKAN DIVIDEN DAN KEPUTUSAN INVESTASI." Jurnal Manajemen 12, no. 2 (November 1, 2015): 129–46. http://dx.doi.org/10.25170/jm.v12i2.812.
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This study analyzes the effect of debt policy on dividend policy and investment decision on corporate manufacturing industry sector in IDX the period of 2009-2013. This study uses a quantitative approach to multiple linear regression analysis model. This study uses a sample of firms / companies who are in the manufacturing industry sectors in IDX period of 2009-2013. This study finds that debt policy doesn’t have significant effect on dividend policy, while control variable, MBVE has negative significant effect on dividend policy. Debt policy has positive significant effect on investment decision while MBVE doesn’t have significant effect on investment decision on manufacturing industry sector in IDX the period of 2009-2013.
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Pahi, Debasis, and Inder Sekhar Yadav. "Role of Corporate Governance in Determining Dividend Policy: Panel Evidence from India." International Journal of Trade, Economics and Finance 9, no. 3 (June 2018): 111–15. http://dx.doi.org/10.18178/ijtef.2018.9.3.598.
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Ngadiman. "The Effect of Leverage, Dividend Policy, and Relational Capital on Corporate Performance." Higher School of Economics Economic Journal 24, no. 2 (2020): 295–310. http://dx.doi.org/10.17323/1813-8691-2020-24-2-295-310.
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Bertus, Mark, John S. Jahera Jr., and Keven Yost. "Sarbanes-Oxley, corporate governance, and strategic dividend decisions." Corporate Ownership and Control 17, no. 1 (2019): 116–24. http://dx.doi.org/10.22495/cocv17i1art11.
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This paper empirically analyzes the impact of the Sarbanes-Oxley Act on the relation between measures of corporate governance and a firm’s dividend policy in the U.S. equity market. Using the IRRC database, we find that there is a statistically significant relation between governance measures and a firm’s dividend policy in the years prior to the introduction of the Sarbanes-Oxley Act. However, following Sarbanes-Oxley, the relation between a firm’s governance structure and dividend policy changes. In particular, shareholders’ rights and the proportion of outside directors are no longer significant in explaining a firm’s dividend policy.
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Wibisono, Yusuf, M. Sholihun, and Nani Hanifah. "SUPERMAKET DIVIDEND DISTRIBUTION POLICY." Assets : Jurnal Ilmiah Ilmu Akuntansi, Keuangan dan Pajak 4, no. 1 (January 31, 2020): 8–15. http://dx.doi.org/10.30741/assets.v4i1.559.
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This study aims to examine the development of the management of Lumajang Supermarkets Amanah Supermarkets, which was established in 2012 with its own capital and sell shares to the public as long as approximately seven can run well in the midst of business competition and can earn profits or profits stably, so as to divide dividends to shareholders. This research is a qualitative descriptive study. The data was obtained from the Lumajang Shirkah Amanah Self-Service report for the past three years. From the profits obtained, the management makes a policy of profit sharing through the General Meeting of Share Shares (GMS). The provisions include net profit before being distributed to shareholders, issued in advance by 25% for business development, 2.5% for managers, 2, 5% for organizations, 2.5% for infaq/ zakat syirkah, and 1% for shareholder shopping rewards. Dividend distribution policy is influenced by several factors, including corporate liquidity, profitability and is supported by earnings stability.
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Rajput, Monika, and Shital Jhunjhunwala. "Corporate governance and payout policy: evidence from India." Corporate Governance: The International Journal of Business in Society 19, no. 5 (October 7, 2019): 1117–32. http://dx.doi.org/10.1108/cg-07-2018-0258.
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Purpose The purpose of this paper is to study the impact of ownership structure and corporate governance on dividend policy in emerging markets, like India. The study also analyses the moderation effects of board independence between ownership and dividend payout. Design/methodology/approach The data set of 1,546 Indian firms over the period of 2006-2017 has been used in this study. Tobit and logistic regression methods has been used. The data used in this study are collected from the Centre for Monitoring Indian Economy (CMIE) Prowess database. The sample firms are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Findings First, the study finds a significant positive influence of corporate governance on the decision to pay dividend and is an important determinant of the payout decision. Second, the study finds a significant negative relationship of family ownership with dividend payout decisions which indicates that family firms pay lower dividend. Finally, the result from the interaction effect of board independence with family ownership has significant positive influence on dividend policy. Originality/value This is one of the first attempt to show that there is an interaction between independent board and ownership structure. It shows that more independent and non-executive directors in the board of family controlled firms are likely to pay more dividends.
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Hasan, Fakhrul. "Relationship between Orthodox Finance and Dividend Policy: A Literature Review." Indian-Pacific Journal of Accounting and Finance 5, no. 1 (January 1, 2021): 13–40. http://dx.doi.org/10.52962/ipjaf.2021.5.1.122.
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This paper concentrates on the relationship between orthodox (corporate) finance and dividend policy. More specifically, the paper examines the relationship between different dividend policy theories and dividend policy. This paper also investigates the association between different corporate finance elements and dividend policy. The primary purpose of this paper is to put some light on the dividend literature, which means how dividend literature developed over the year. However still, the dividend policy is a puzzle for researchers. From the previous literature survey, we can see that after so much constrictive research, researchers still did not reach any conclusion. This paper provides details about previous literature reviews in the area of dividend policy.
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Hamdouni, Amina. "Dividend policy and corporate governance in Saudi stock market: Outcome model or substitute model?" Corporate Ownership and Control 12, no. 2 (2015): 74–91. http://dx.doi.org/10.22495/cocv12i2p7.
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Theories suggest that corporate governance mechanisms affect corporate dividend policies. This study extends and tests the implications of two extant static agency models making opposite predictions. The outcome model predicts an increase in dividends when the corporate governance mechanisms improve, because shareholders are better able to force managers to disgorge cash. In contrast, the substitute model suggests that an improvement in the corporate governance mechanisms reduces the role of dividends in controlling agency costs, leading to a decrease in dividends. This paper investigates the dividend policy for firms listed on Saudi Arabia Stock Exchange. This is a case study of Saudi Stock Market, where the determinants of dividend policy have received little attention. This study use a panel dataset of non-financial firms listed on Saudi Arabia Stock Exchange between the years of 2007 and 2010. Based on a panel of 366 firm year observations of 99 Saudi firms, we provide evidence in outcome model or substitute model with ownership structure, board structure and debt policy. Three Tobit models are specified: In the first, we construct a governance index based on eight criteria: seven criteria which capture various aspects of a firm’s structure, policies and practices that constitute good governance and a criterion that examines the company’s compliance with Shariah law in all its activities. Therefore, we estimate the effect of corporate governance on dividend policy in the first model. In the second, we investigate how dividends interact with corporate governance mechanisms in a panel of data. We explore the relation between dividends and ownership structure (ownership concentration and managerial ownership), board structure (board size, Board independence and Chairman-CEO duality) and debt policy. In the final, another test of the substitute and the outcome models is built on the Jensen (1986) free cash flow theory, which states that dividend policy can extract surplus cash from management control by reducing free cash flow. In this third model, we examine how corporate governance improvements affect the dividends’ sensitivity to free cash flows by focusing on the coefficients on the interactive variables of the ownership structure, board structure, debt policy and the free cash flow. For the three models, we divide sample in two subsamples and we compare the results obtained by using criteria of company’s compliance with Shariah law. For the effects of corporate governance (measured by corporate governance score) on dividend levels, we find that dividend policy is a substitute model for good governance for all Saudi Arabia firms. When we select only Shariah compliant firms, results indicate also that dividend policy is a substitute model for good governance but results are insignificant. When we select only Non-Shariah compliant firms, results indicate the same conclusion. We find that governance is associated with fewer dividends, supporting the substitute model and indicating the influence of good governance by forcing less cash to be returned to investors. For the effects of corporate governance mechanisms on dividend levels, we find that the only variable affect the dividend levels for Non-Shariah compliant firms is the separation in the functions of chairman and of CEO supporting the substitute model. For Shariah compliant firms, dividend policy is an outcome for the separation in the functions of chairman and of CEO, and ownership concentration. Governance through the separation in the functions of chairman and of CEO and ownership concentration influences firms by forcing more cash to be returned to investors. For the effects of the corporate governance improvements on dividends’ sensitivity to free cash flow, our results support the substitute hypothesis for Shariah compliant firms regardless the board independence, board meeting, managerial ownership and debt. Improvements in these corporate governance mechanisms reduce firms’ need to force out the free cash flow through dividends. For Non-Shariah compliant firms, our results support the outcome model for managerial ownership and ownership concentration
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Mohy-Ud-Din, Kamran, Riaz Ahmad, Hafiz Muhammad Ishaq, and Muhammad Akram. "Moderating Role of Investment Efficiency between Board Diversity and Dividend Policy: Evidence from Pakistan." iRASD Journal of Management 4, no. 2 (June 27, 2022): 284–96. http://dx.doi.org/10.52131/jom.2022.0402.0079.
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The purpose of this study is to enhance the understanding in debate of governance demographics by investigate the impact of board diversity on dividend policy and moderating effect of corporate investment efficiency on dividend policy. The sample incorporated in this study comprises of panel data of 77 firms listed in Karachi stock exchange (KSE) during the period of 2012-2019. This study performs a parametric technique regression analysis to measure the investment efficiency and Panel least square models to investigate the association between board diversity and dividend policy. Furthermore, hierarchical explained the results for interaction effect of investment efficiency. This study adds a new finding in the corporate governance through empirical an investigation on the association between board diversity and dividend policy. Results support the interaction effect of investment efficiency between board diversity and dividend policy. Our study suggests that firms involve in high level of efficient investment with diverse ethnic backgrounds and gender in corporate board significantly associated with dividend policy. This study explains the practical implications for the corporate boards in the south Asian culture who enhance the investment efficiency that main goal of finance to enhance the wealth maximization of shareholders in terms of dividends.
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Satria, Hendy, Muhammad Isa Alamsyahbana, Rachmad Chartady, Fauzi Fauzi, and Novi Chandra Saputra. "Corporate Governance , Characteristics on Dividend Policy: Evidence From Indonesia." Ilomata International Journal of Tax and Accounting 2, no. 4 (October 31, 2021): 323–31. http://dx.doi.org/10.52728/ijtc.v2i4.364.
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This research aims to explore the instability of the dividend distribution policy of listed companies on the Indonesian stock exchange. Researchers use several main variables as indicators to measure their impact on dividend policy. The samples used are 75 manufacturing companies. Data analysis technology uses descriptive statistical analysis and E Views 6. 0 as data processing tools. The results of this study show that the audit committee has a negative and insignificant influence on dividend policy. At the same time, independent committees, public interest, company size and profitability have a positive and significant impact on dividend policy.
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Pahi, Debasis, and Inder Sekhar Yadav. "Does corporate governance affect dividend policy in India? Firm-level evidence from new indices." Managerial Finance 45, no. 9 (September 9, 2019): 1219–38. http://dx.doi.org/10.1108/mf-01-2019-0030.
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Purpose The purpose of this paper is to investigate the nexus between corporate governance and dividend policy of listed Indian firms. Design/methodology/approach Using new corporate governance stipulations, five new indices were constructed, namely, overall board governance index, board structure index, audit committee index, compensation committee index and nomination committee index. Using the newly developed indices, disclosure index and different firm-specific control variables, different panel Logit and Tobit regression models were estimated for 482 non-financial and non-utility listed firms during 2006–2017. Also, before the econometric analysis, mean difference test was conducted to examine the differences in dividend behaviour and corporate governance practices during pre- and post-Companies Act, 2013 and between payers and non-payers. Findings The overall evidence suggests that the firms having stronger corporate governance tend to pay higher dividends suggesting that the firm’s propensity to pay dividends increases with the improvement in corporate governance standards. Among the corporate governance indices board structure, audit committee and disclosure norms show a significant and positive relationship, whereas compensation committee and nomination committee show a positive but insignificant relationship with dividend policy. Control variables mostly had the expected impact on the dividends of the firms. Practical implications This study suggests that the establishment of the strong and effective corporate governance system is desirable to mitigate the agency conflicts between managers and shareholders and limit managers’ opportunistic behaviour in dividend payout policy. Originality/value This study is one of the latest studies to use several newly constructed indices on corporate governance mechanism based on new stipulations which bring new evidence on their specific impact on the dividend policy for an emerging market economy like India.
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Trabelsi, Dhoha, Saqib Aziz, and Jean-Jacques Lilti. "A behavioral perspective on corporate dividend policy: evidence from France." Corporate Governance: The International Journal of Business in Society 19, no. 1 (February 4, 2019): 102–19. http://dx.doi.org/10.1108/cg-02-2018-0077.
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PurposeThis paper empirically examines the catering theory of Baker and Wurgler (2004) in the particular context of France. Considering the characteristics of French market – known for its high concentration of capital – it attempts to highlight the role family control plays in the managerial tendencies to satisfy non-informative dividend demands.Design/methodology/approachThe paper focuses on a large data set of French firms included in the SBF-250 index over a period of 1992-2010. It uses a variety of dividend policy measures, including dividend premium, percentage of dividend-paying firms and probability of paying dividends. It adopts appropriate empirical specifications (time-series and probit models) to substantiate the research hypotheses.FindingsThe empirical findings show that the percentage of payers rises with the dividend premium, and that the dividend premium and the confidence index of French households are negatively correlated. This reflects the sensitivity of dividend demand to investor sentiment. Moreover, results of multivariate panel regression show a positive and statistically significant effect of the dividend premium on the firm’s tendency to pay, after controlling for firm characteristics. Finally, it finds that the dividend premium effect disappears in the case of family-controlled firms. This result is in line with the long-term orientation of family firms.Research limitations/implicationsThe study focuses on the dividend payment behavior of French firms. Although dividends are deeply engrained in France, authors believe that it will be interesting to look at the whole payout policy and particularly the role played by share repurchases.Practical implicationsAddressing short-term catering and managerial opportunism, the results of this study may be of interest for shareholders, potential investors and regulators.Originality/valueTo the best of the authors’ knowledge, this is the first study that provides empirical evidence on Baker and Wurgler (2004) catering theory by considering the particularity of French market where, unlike the US, percentage of dividend-paying firms is high and the corporate ownership structures are different.