Amount Of Dividends Research Articles

Dividend Capture on the Ex-dividend Day: Evidence from Vietnamese Stock Market

Vietnamese stock market is a promising laboratory to investigate the ex-day behaviour of stock price due to its special features: Firstly, the market uses periodic call auction mechanism for determining both opening and closing prices and there is no market maker. Secondly, tick size is much smaller than dividend amount. These imply that market microstructure theories are not applicable explanations. Thirdly, unlike many markets’ taxation of capital gains and dividends, there is no considerably preferential treatment of capital gains to dividends. Finally, short-selling is prohibited. Comparing the observed values of price drop to dividend ratio and their expected values under the impact of tax policy, we find that tax treatment fails to explain the anomaly in the research framework. The research findings show that abnormal returns are significantly positive and negative in the pre- and the post ex-dividend day periods, respectively. Moreover, regression results and relevant analysis show supporting evidence for dividend capture theory.

Factors Affecting Dividend Payout Ratio of Food and Beverage Manufacturing Companies in Indonesia

Dividend Payout Ratio (DPR) is a parameter to measure the amount of dividend to be distributed to shareholders. This is because investors want to know how much DPR they receive. If they see the revenue earned by them including profitable, then investors will not hesitate to invest their capital in the company. This study aims to determine and analyze the factors affecting the DPR of food and beverage manufacturing companies in Indonesia listed on the Indonesia Stock Exchange from 2010 to 2014. There are 5 (five) independent variables that represent the ratio of published financial performance, which allegedly affect the House of Representatives i.e., Cash Position (CP), Free Cash Flow (FCF), Debt to Equity Ratio (DER), Return on Assets (ROA), and Company Size (CS). Based on the results of the tests conducted can be seen that there are two independent variables namely the ratio of CP and ROA which have a significant effect on DPR, while the other three variables are FCF, DER, and CS have no significant effect on devidend payout ratio.

Production and Capacity Management with Internal Financing

We formulate and analyze a stylized dynamic model of a price-taking firm that manages production and capacity, uses only internal financing, and faces stochastic market environments. The firm has two operationally independent production facilities, each of which makes two products, and a cash reserve that finances all operations and dividend issuance. Each period the firm chooses the amount of dividend to issue, and at each facility it chooses production quantities and amounts of capacity to augment or divest. Relevant market data are exogenous and evolve stochastically. We completely characterize the optimal policy and the endogenous values of the capacities and cash reserve, and show that they invite a real-option interpretation. We find that internal financing creates a spillover between the endogenous values of the two operationally independent facilities, and we specify how this leads to interdependence of their optimal policies. We show that an “invest/stay put/divest” (ISD) policy remains optimal for partially irreversible investments, but internal financing changes the ISD thresholds. If the exogenous data are intertemporally independent, an internally financed firm is less likely to issue dividends or to expand capacity than if it were in a perfect capital market. As the market becomes more volatile, the endogenous values of capacities and cash increase, and the firm becomes more reluctant to issue dividends. The online appendix is available at https://doi.org/10.1287/msom.2017.0655 . This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Interface of Finance, Operations, and Risk Management.

The Impact of Market Structure on Ex‐Dividend Day Stock Price Behavior

AbstractWe explore the impact of market structure on the ex‐day price anomaly. Measuring the price‐drop ratio (PDR) as the ratio of the price change on the ex‐day to the dividend amount, we find that the average NASDAQ PDR is significantly less than one and significantly less than the New York Stock Exchange (NYSE) PDR. We then investigate a subset of firms that voluntary switch from NASDAQ to the NYSE and find that the PDR significantly increases after the switch, suggesting that market structure affects PDRs. We also create a matched sample and find that the NASDAQ PDR converges toward its matched NYSE counterpart, particularly after the introduction of SuperMontage. Our evidence is consistent with significant NASDAQ market structure changes reducing execution cost differences between the two exchanges and, in turn, reducing the PDR difference. Overall, our results highlight the important role market structure can play in understanding anomalies.

Optimal dividend strategies with time-inconsistent preferences and transaction costs in the Cramér–Lundberg model

This paper considers the optimal dividend strategies for an insurance company with transaction costs and time-inconsistent preferences. We assume that the company’s surplus is modeled by a compound Poisson process and that the manager is either naive or sophisticated. We tackle the optimal dividend problem when the claim sizes belong to a certain class of distributions and the optimal dividend strategies are of the lump sum type. Our results indicate that a time-inconsistent manager tends to pay out dividends earlier and more frequently than a time-consistent manager, but with smaller dividend amounts. We also present the special case where claim sizes follow mixed exponential distribution to illustrate our results and to analyze the effect of time-inconsistency and transaction costs on the optimal dividend strategies.

Stock Price Reaction to Dividends Declaration in Emerging Stock Market

This study examines the common stock price behavior on ex-dividend day in Egyptian stock Market, and whether there is a significant statistical relationship between cash dividend as independent variable and stock price as dependent variable. The researchers executed the examination on the raw stocks’ prices during the period from 2006 till 2010. It is noticeable that the Egyptian stocks market has special features where there are neither taxes on capital gains nor on cash dividends, and cash dividends in almost cases are distributed annually. The study is conducted on each year separately then on the accumulated data of all years to give diversity in results. A significant statistical relationship between cash dividend and price drop on ex-dividend day is found. The research found that the stock raw price drops on ex-dividend day by less than the amount of cash dividend and the average ratio of change in price to cash dividend during the whole period from 2006 till 2010 is 0.534. Which means that there is a market abnormal return that can lead to an arbitrage opportunity for investors.

Managing Capital via Internal Capital Market Transactions: The Case of Life Insurers

AbstractThe movement of capital within insurance groups is important for understanding insolvency risk management, as well as regulatory policies regarding capital standards and group supervision. Panel data estimates indicate that, on average, a dollar decrease in performance (net income plus unrealized capital gains) when performance is negative is associated with a $0.26 increase in capital contributions to life insurers from other entities in the group, and that a dollar increase in performance when performance is positive is associated with a $0.56 increase in the amount of internal shareholder dividends paid by life insurers to other entities in the group. Moreover, the sensitivity of internal dividends to performance is higher during the financial crisis than the noncrisis period. Also, insurers with low (high) risk‐based capital ratios receive more (less) internal capital contributions than other insurers, holding other factors constant.

EXERCISING AND PROTECTION OF SHAREHOLDERS’ RIGHTS TO RESEIVE DIVIDENDS, COMPARATIVELY LEGAL ASPECTS

In comparison with current national legislation, EU legislation and legislation of its individual member states established a number of features of realization and protection of shareholders’ rights to participate in the distribution of profits of the company. Unlike to the art. 31 of the Law of Ukraine «On Joint Stock Companies», in which a ban on dividends is set only if such conditions are encountered at the time of making decision to pay and its implementation, the Second Directive 77/91 / EEC foresees such ban even if some negative effects may occur in the future. In particular, in accordance with part 1 of art. 15 Second Directive dividend payment is not made if the net assets of the companydue to the such payment may become less than the authorized capital increased by the reserves that the law or statute prohibits to distribute. The second EU directive sets the maximum amount of dividends to shareholders: no more than the sum of the results of the last completed financial year increased by the amount of undistributed income, as well as the amount of deduction from available for this purpose reserves and reduced by the amount deferred (uncoated) losses, as well as amounts that are entered in the reserve fund in accordance with the law or statute. The legislation of Ukraine does not provide the upper limit of the size of the dividends that may be paid to shareholders. The right to distribution of assets the company under the laws of the EU, except the right to choose areas of using profit and the right to receive dividends, includes another subjective right - the right to receive the interest accrued on the shares. Ukrainian legislation does not establish the possibility of calculation and payment of interest on the shares. Unlike the law of our countryEU law provides for the payment of interim dividends. The Law of Ukraine «On Joint Stock Companies» does not establish a right to interim dividend. By the EU legislation established a special way to protect the right to receive dividend payments in case of violation of legal limits set for it. In particular, the shareholders who received dividends contrary to established legal limits, the court can be obliged to return the amount of dividends received improperly. The Law of Ukraine «On Joint Stock Companies» (art. 31) does not establish the legal consequences of dividend payment due to the failure limits that are set for it. At the national law systems of some EU countries (Greece, Germany, Portugal, Finland, Switzerland, Sweden, etc.) established the right of shareholders to mandatory payment of dividends regardless of whether the decision of the supreme governing body of the company. The legislation of Ukraine provides such right only to holders of preferred shares. Holders of ordinary shares may exercise the right to receive dividends only if the general meeting of shareholders make the decision on their payment.

Uncertainty and firm dividend policy—A natural experiment

We examine how firms respond to uncertainty around U.S. tax policy changes, namely the individual level tax rate increases set to take effect on January 1, 2011 and January 1, 2013. We provide evidence that firms time the uncertainty in the tax environment and revise their dividend policy to an expected tax increase. We find that firms are likely to initiate their dividends or intensively increase their existing dividend amount one year before the expected tax increase. In addition, in 2012 when there is much less uncertainty on dividend tax changes than in 2010, firms are less likely to initiate a regular dividend but are more likely to initiate special dividends. The results suggest that firms facing less tax uncertainty are less likely to make long-term commitments on regular dividend payments but are more likely to take advantage of the last-minute low tax benefits by issuing special dividends. Furthermore, the response to the possible elimination of a tax cut was strongest in firms with high levels of tax-affected ownership, supporting the argument that when facing policy uncertainty, firms behave to prepare for the worst scenarios from the viewpoint of the shareholders, which in this case is a tax increase.

The market for corporate control and dividend policies: Cross-country evidence from M&A laws

This article examines the association between the market for corporate control and firm dividend policies. Specifically, we examine changes in firms’ dividend payouts following a plausibly exogenous shock to the threat of takeover with the staggered initiation of country-level merger and acquisition (M&A) laws. Using a global sample of firms across 34 countries, we find that both the likelihood and the amount of dividends decrease significantly after the initiation of an M&A law in a country. Our cross-sectional analyses indicate that the negative effect of M&A laws on dividend payouts is amplified in countries where the institutional environment enables M&A laws to improve the takeover market and for firms that could readily use internal capital to finance growth opportunities. Moreover, this negative effect is attenuated for firms with already sufficient monitoring of managers. These findings suggest that the enactment of M&A laws, by strengthening the market for corporate control, lowered the need for firms to convey their commitment to shareholders’ interests through costly dividend payments, especially when the threat of takeover prompted by M&A laws is likely to serve as an effective disciplinary mechanism.

LIKUIDITAS, LEVERAGE, PROFITABILITAS PENGARUHNYATERHADAP NILAI PERUSAHAAN MANUFAKTUR DI INDONESIA MELALUI KEBIJAKAN DEVIDEN

The company’s value can be found on the ability to pay dividends. The amount of dividends paid to shareholders depend on the dividend policy of each company. This study aims to determine how the effect of liquidity, leverage, profitability toward dividend policy and the value of manufacturing companies in Indonesia. The number of samples are 8 manufacturing company. Data were analyzed using path analysis model. The results showed that liquidity, leverage, profitability have significantly influence on the company’s value, through the variable dividend policy shows the effect of the narrowing means that the value of the company was affected by the dividend policy is not significant. Partially, not all variables have a significant effect, just variables liquidity and leverage have correlation coefficient (R) of 0.574 with a significance of 0.025 which means proven strong correlation with the criteria. While the value of the coefficient of determination (R square) is 32.9%, which variables liquidity, leverage, profitability have influence to company’s value. Keywords: Liquidity , Leverage , Profitability , Dividend Policy , Values of Firm.

Catering to Long Term Policy or Catering to Market Sentiment? Dividends in India

We examine the trend in probability to pay dividends and the level of payout for listed non-financial Indian firms between 2000 and 2015. We report four major findings. Firstly, we find a declining trend in both the payment probability and the level of dividends since the global financial crisis. We find that firms in a relationship with a scheduled commercial banks (SCB) are more likely to pay dividends, however, there is a great degree of heterogeneity in the level of payment by firms associated with SCB’s. Firms in a relationship with foreign banks pay the most amount of dividends and firms in a relationship with state-owned banks pay the least amount. Further, we find that risk does not completely explain the “disappearing dividend” puzzle. A major portion of variation in dividends is explained by firms’ catering to market sentiment, i.e. firms change dividend policy in response to market sentiment towards dividend paying firms. We find that firms with higher level of family ownership are not only more likely to pay dividends, but the level of dividends increases with increase in family ownership. Additionally, we find evidence of higher payout by firms affiliated with business groups.

Dividend payouts and company ownership structure amid the global financial crisis: evidence from Russia

This article presents the results of an empirical study of the relationship between the ownership structure of Russian companies and their dividend policies against the backdrop of the global financial crisis. Quantitative estimates are obtained through panel data statistical analysis; the sample comprises data covering the 2003–2011 period for the largest companies in the non-financial sector of the national economy. The results show that amid the global financial crisis, the dividend payments of state-owned companies decrease more significantly than those of privately owned companies, whereas in the pre-crisis period, no significant differences are found between the dividend payouts of state-owned and privately owned companies. The public status of a company acts as one of the most significant determinants of both the decision to pay dividends and the amount of dividends paid. However, the generous dividend policies of public companies suffer greater ‘adjustments’ during the crisis period. Company profitability, size, investing activity, company financial structure and sectoral affiliation also act as important determinants of dividend payout.

Optimal control strategies for dividend payments and capital injections in compound Markov binomial risk model with penalties for deficits

ABSTRACTWe consider the compound Markov binomial risk model. The company controls the amount of dividends paid to the shareholders as well as the capital injections in order to maximize the cumulative expected discounted dividends minus the discounted capital injections and the discounted penalties for deficits prior to ruin. We show that the optimal value function is the unique solution of an HJB equation, and the optimal control strategy is a two-barriers strategy given the current state of the Markov chain. We obtain some properties of the optimal strategy and the optimal condition for ruining the company. We offer a high-efficiency algorithm for obtaining the optimal strategy and the optimal value function. In addition, we also discuss the optimal control problem under a restriction of bounded dividend rates. Numerical results are provided to illustrate the algorithm and the impact of the penalties.

Information content of unexpected dividends under a semi-mandatory dividend policy: An empirical study of China

We examine the information content of unexpected dividend changes under China’s unique semi-mandatory dividend policy, which requires firms to pay a minimum amount of cash dividends before they can undertake seasoned equity offerings (SEO). The cumulative abnormal returns (CARs) are significantly positive in response to unexpected dividend increase for non-SEO firms, but they are not significantly different from zero for SEO firms. For non-SEO firms, there is a significant positive relation between future earnings and unexpected dividend increases, but the relation is not significant for SEO firms. However, when considering additional refinancing costs for SEO firms caused by the mandatory dividend policy, higher dividend payments are associated with lower future earnings. Overall, our findings are consistent with both the dividend signaling theory and the negative effects of SEOs on a firm’s value.

Corporate Social Responsibility and Firm Financial Performance

This study explores whether there is a relationship between corporate social responsibility and firm financial performance including ROA, debt level, P/E. It investigates their relationship for the firms with positive gross profit, firms with negative gross profits, large cap firms, medium cap firms and small cap firms, firms in finance, insurance and real estate industries. The relationship between CSR and firm financial performance is different for different group of firms. However, the CSR is significantly related with the number of employees and amount of dividends. This relationship holds for most of firms.

The impact of nominal stock price on ex-dividend price responses

In this paper, we examine whether nominal stock price can help to explain the ex-dividend day anomaly where stock prices drop by less than the dividend amount on the ex-dividend date. We find that stocks with lower nominal prices have ex-dividend day price drops that are more consistent with theoretical predictions based on an efficient market. After controlling for factors that have been previously documented to influence ex-dividend day stock price behavior, price-drop-to-dividend ratios are closer to one for lower priced stocks. To further explore this phenomenon, we examine the change in the price-drop-to-dividend ratio around stock splits. Firms that split their shares have a larger price-drop-to-dividend ratio after the split, and companies that reverse split their shares have a smaller price-drop-to-dividend ratio after the split. Our evidence indicates that ex-dividend day stock price behavior is influenced by the nominal price of a share and that this relation could also influence the decision to split a firm’s shares.

Optimal proportional reinsurance and dividend payments with transaction costs and internal competition

We study the dividend optimization problem for an insurance company under the consideration of internal competition between different units inside company and transaction costs when dividends occur. The management of the company controls the reinsurance rate, the timing and the amount of dividends paid out to maximize the expected total dividends paid out to the shareholders until ruin time. By solving the corresponding quasi-variational inequality, we obtain the optimal return function and the optimal strategy.

The Impact of Dividend Announcement on Stock Returns

One of the factors that influences the stock return is announcement of dividend. This study specifically investigates the impact of dividend announcement on the share prices of the Indian auto companies. The objective of the study is to find out whether the investors respond to the dividend announcements and also to see whether there are any differences between expected and actual returns. The study considers a sample of 10 auto companies listed under the head CNX auto for the period 2007-2014. By using event study methodology for a window period of 41 days the study shows that there is significant negative impact of dividend announcements on stock prices especially over the entire post announcement period. Thus the study concludes that the existing shareholders prefer to earn capital gain instead of a dividend amounts at regular intervals.

Analysis on Interference Impact of Wi-Fi on Digital Terrestrial Television Broadcasting

Transition from Analogue Terrestrial Television Broadcasting to Digital Terrestrial Television Broadcasting (DTTB) in the 470-862 MHz band made available amount of spectrum so-called digital dividend for other services i.e. 790-862 MHz band (800 MHz) to mobile service. Recently the 694-790 MHz band (700 MHz) was also allocated to mobile service in ITU Region 1. Spectrum allocated to a broadcasting service but not used locally is called as TV white spaces (TVWS). It is possible to introduce TVWS services in 470-790 MHz band under the condition that other services in this band already operating, or planned in the country and in neighboring countries, are adequately protected and this use does not violate the current ITU Radio Regulations. TVWS under some conditions locally could be used for mobile communication systems e.g. unlicensed Wireless Fidelity (Wi-Fi) using cognitive radio. As TVWS are located in the UHF band, the use of TVWS can provide significantly better coverage and wall penetration inside buildings than 2.4 GHz and 5 GHz range Wi-Fi frequencies. The exact amount of available spectrum for TVWS at any location will be dependent upon each country national situation e.g. DTTB planning configuration, other services use in the band. In case of deploying Wi-Fi in the TVWS the interference impact of Wi-Fi on DTTB has to be taken into account. The aim of this paper is to analyze the interference impact of Wi-Fi on DTTB. In this paper the interference occurring probability in DTTB receiver was evaluated by using Spectrum Engineering Advanced Monte-Carlo Analysis Tool (SEAMCAT).