Abstract
Purpose – T elecommunications stocks are known to be defensive stocks, which are less susceptible to volatility in the global financial markets and usually pay higher dividends than in other industries. In this context, this paper intends to study the influence of some specific characteristics of these companies on the payment of dividends . Design/methodology/approach – To achieve the proposed objective, the panel data methodology was used, specifically the GMM estimation method for a sample consisting of 34 companies listed in Western Europe and North America in the period between 2007 and 2016 and in the sub-period between 2008 and 2013 , which comprises the global financial crisis. Findings – The results show that specific factors such as investment in fixed capital, indebtedness, price to book value ratio, free cash flow (FCF), liquidity , and dividends paid in the previous year are decisive in explaining the dividends distributed in the entire period. For the financial crisis period , the sign and significance of the variables remain almost unchanged, suggesting that these companies pay dividends regardless of economic cycles, covering the absence of FCF with adequate liquidity levels to satisfy investors during recessive periods. Originality/value – Our study contributes to a better understanding of the telecommunications sector and the dividend policy carried out by managers in this sector, and it can assist in the analyses of investors, other managers, financial analysts , and researchers on the subject.
Highlights
Our study contributes to a better understanding of the telecommunications sector and the dividend policy carried out by managers in this sector, and it can assist in the analyses of investors, other managers, financial analysts, and researchers on the subject
Where Divsharesi,t represents the dependent variable, dividend per share, ICF is the investment in fixed assets variable, Leverage is the ratio between debt and total assets and measures the company’s level of indebtedness, BV represents the book value variable, FCF is the free cash flow, WC is the working capital, and represents the dividend per share from the previous year
Dividend policy has been a hotly debated topic in the financial literature, but despite this it continues to be understood as a puzzle in which it is necessary to add more pieces, and it continues to be an open issue
Summary
Our study contributes to a better understanding of the telecommunications sector and the dividend policy carried out by managers in this sector, and it can assist in the analyses of investors, other managers, financial analysts, and researchers on the subject. Dividend policy has long been a question of interest in the financial literature and, there is a great deal of research on the subject, it remains an open issue. DeAngelo, DeAngelo, and Skinner (2004) base their explanation of the phenomenon of declining dividends on the concentration of dividends by the main payers of North American companies, as well as on the decline in the frequency of payments of special dividends in the last few years. The development of the mobile internet and the consequent impact it has on the lives of all of us means telecommunications companies play a fundamental role in the world economy, increasing interest in the literature on the viability of telecommunications as one of the determinants of economic growth (Sridhar & Sridhar, 2007)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
