Dividend Decisions Research Articles

Finance Decisions and Cash Flow Sensitivity : An Empirical Study of the Indian Industry

To be effective in cash management, there is a necessity to quantify the influence of various finance functions on the cash accounts of the firms. This paper empirically measured the effects of finance functions on the cash account. The results revealed that the effect of cash flow on dividend decisions was statistically significant, while the effect of cash on capital budgeting and capital structure decisions was of limited relevance. Subsequent analysis unfolded that capital budgeting and capital structure decisions are inherently related; indeed, big size investments are linked with the mobilization of funds. While financing the investments, firms prioritized borrowing, and comparatively lower priority was given to mobilizing new equity capital. This observation confirmed the application of the pecking order hypothesis in the financing practice of Indian firms.

Визначальні фактори дивідендної політики на основі використання підходу моделювання за структурними рівняннями: дослідження банківського сектору Бангладеш

One of the most controversial problems of modern corporate finance is the dividend policy, which can be described as a trade-off between the size of retained earnings and the amount of securities issued. When deciding on a dividend policy, firms take several aspects into account. The current study looks at the elements that influence banks’ dividend distribution decisions. A panel dataset of 22 banks listed on the Dhaka Stock Exchange (DSE) from FY 1999 to 2018 was used for the empirical analysis. The results are inferred using structural equation modeling (SEM). The findings show that retained earnings, leverage, and size are important factors in determining dividend payouts, whereas earnings per share, cash flow, sales growth, liquidity, institutional ownership, sponsor ownership, individual ownership, risk, age, relative tax, return on assets, investment opportunity, and retained earnings are insignificant while taking dividend decision. The findings also support the notion that dividend payouts have reduced the agency problem and that management utilizes them as a signaling device. Furthermore, the findings show that the majority of dividend policy theories that are traditionally based on developed markets can be applied to emerging market countries like Bangladesh, because the majority of the characteristics found to be important in determining dividend policies in Bangladesh are consistent with those established in developed economies. This study's findings can be used by financial managers and policymakers to make proper dividend decisions. They can also assist investors in making portfolio selections based on sectoral dividend payment patterns.

Impact of Financial Decisions on Firm Performance: Path Analysis Approach

This study intended to explore causal relationships between the corporate performance and financial decisions of the firms which are listed on the Pakistan stock exchange (PSX). This study has used Return on assets and Tobin's Q as the measures of accounting performance and market performance respectively. To effectively examine the causal structure of corporate financing, investment, dividend payout decisions, and the firm performance simultaneously this study has used path analysis approach. The sample comprises 292 non-financial firms which are listed on the Pakistan Stock Exchange (PSX). The findings clearly show that debt financing has positive effect on the investment and dividend has negative effect on the investment decisions. The debt financing and investment has a negative impact on corporate performance while dividend decisions has a positive impact on corporate performance. This study helps to understand the corporate decision making process of Pakistani firms. To the author's knowledge this is the first study attempted to check the application of path analysis in emerging economies to study the causal structure of corporate financial decisions and corporate performance.

Financial Decisions and Profitability of Large-scale Retail Supermarkets in Kenya: Application of Dividend Decisions

Financial decisions ensure that supermarket managers invest in viable projects, stipulate optimum capital structure and adequately compensate shareholders. For the last two decades, large-scale retail stores have been facing poor financial performance leading to the closure of some of their branches. This study aimed at assessing the effect of financial decisions on the profitability of large-scale retail supermarkets in Kenya. The specific objective of the study was to examine the effects of dividend decisions on the profitability of large-scale retail stores in Kenya. The study was guided by pecking order theory. The target population was nine largescale retail supermarkets in Kenya. Census sampling technique was adopted therefore all the large-scale retail supermarkets were used in the study. Data was collected from audited financial statements. Panel Data was analyzed using descriptive and inferential statistics. Descriptive statistics comprised of mean, minimum value, maximum value, and standard deviation. Inferential statistics consisted of random effects model. Positive and statistically significant effect was found to exist between dividend decisions and profitability; this was supported by regression coefficient of 0.4180 and p-value of 0.016 less than 0.05 level of significant. The study therefore concluded that increased retained earnings would lead to improved profitability. The study recommends that the management of large-scale retail supermarkets should formulate ideal dividend policies that will properly compensate shareholders while ploughing back enough profits for future investments.

Determinants of dividend policy in Palestinian banks

This study aims to examine whether the dividend theories that were principally developed for non-financial companies in developed institutional environments can explain the dividend policies of banks in Palestine, an emerging market with a high level of uncertainty. It also aims to determine the main factors affecting the banks’ propensity to pay dividends and the banks’ dividend payout ratios. The study uses pooled Probit and ordinary least squares regressions to analyze 10 years of data from all listed banks in the Palestine Stock Exchange Market. The results indicate that agency cost, signaling, and regulatory pressure theories are valid for Palestinian banks. In addition, the analysis shows that bank size, profitability, and capital adequacy are the main positive determinants of Palestinian banks’ propensity to pay dividends and of the dividend payout ratios. Furthermore, after winsorizing the data, the results were found to remain consistent. Finally, the results of a general dominance analysis revealed that bank size is the most important determinant, followed by bank profitability and bank capital adequacy, all three of which positively influence dividend policy decisions in Palestinian banks. This study is among the first to investigate dividend policy determinants in the financial sector. Moreover, this study is conducted in Palestine, an emerging economy. Furthermore, unlike prior studies, this study considers banks’ propensity to pay dividends and banks’ dividend payout ratios concurrently when analyzing the dividend determinants in order to make a significant contribution to solving the dividend determinant puzzle.

How does ownership structure affect the financing and dividend decisions of firm?

PurposeOwnership structure deals with internal corporate governance mechanism, which plays important role in minimizing conflict of interests between shareholders and management Ownership structure is an important mechanism that influences the value of firm, financing and dividend decisions. This paper aims to examine the impact of the ownership structures, i.e. managerial ownership, institutional ownership on financing and dividend policy.Design/methodology/approachThe authors use panel data of manufacturing firms from both developed and developing countries, and the generalized method of moments (GMM) is applied to analyze the results. The authors collect the data from DataStream for the period of 2010 to 2019.FindingsThe authors find that managerial ownership and ownership concentration have significant and positive effects on debt financing, but they have significant and negative effects on dividend policy. Institutional ownership shows a positive impact on financing decisions and dividend policy for sample firms.Originality/valueThis study fills the gap by proving the policy implications for both firms and investors, as managers prefer debt financing, but at the same time try to ignore dividend payment. Therefore, investors may not invest in firms with a higher proportion of managerial ownership and may choose to invest more in institutional ownership, which lowers the agency cost.

Pengaruh Komponen Keputusan Keuangan Terhadap Nilai Perusahaan

This research was conducted to analyze the impact of investment decisions, funding decisions, and dividend decisions on firm value. The object of this research is the sector of trading and service companies listed on the Indonesia Stock Exchange. The sampling method in this research used the purposive sampling technique to get as many as 70 samples. The data analysis process used multiple linear regression analysis models processed by SPSS 25 application software. The results of this research indicate that investment decisions and dividend decisions have a significant positive effect on firm value. Meanwhile, funding decisions do not affect firm value.

Investment decisions, financing and dividends to increase firm value: a case study of manufacturing companies in Indonesia

This study aims to determine the direct relationship of firm value with investment decisions, funding, dividends, and agency costs. The method used in this research is descriptive. The object under study is the manufacturing companies listed on the Indonesia Stock Exchange IDX during 2008-2017, totalling 108 companies. Data was collected using a survey method on cross-sectional and time-series data. The data analysis method used the Partial Least Square (PLS) technique. Tobin’s Q is used as a parameter of firm value. CAP/BVA as an investment decision parameter, DER as a funding decision parameter, DPR as a dividend decision parameter, and FCF as an agency cost parameter. The results directly influence the model that investment decisions, funding decisions, dividend decisions, and agency costs positively affect firm value. The indirect impact states that agency costs significantly mediate the relationship between investment decisions, funding decisions, and dividends on firm value.

Effect of Dividend Decisions on Market Performance of Share Prices for Commercial Banks Listed at Nairobi Securities Exchange

Dividend decisions are the approaches undertaken by the management of an organization to facilitate proper allocation of the cash flows from the business activities. They provide reasonable guidelines for the organization's actions based on the satisfaction of the investors' interests and organizational objectives. They strive to achieve the goals while they seek substantial profitability of the organization. The majority of the studies involving dividend decisions focused on determining the necessity for dividend policies in an organization. Others focused on assessing the Influence of the dividend policies on the stock return of the firm. Therefore, this study investigated the effects of dividend decisions on market performance of share prices for commercial banks listed at Nairobi Stock Exchange. The specific objective is; To determine the impact of dividend payouts on the stock performance of the commercial banks listed at Nairobi Stock Exchange The independent variables in the study is dividend payouts. The dependent variable was the performance of share prices for commercial banks listed at Nairobi Stock Exchange. The theoretical review included the bird in hand theory, information signaling theory, and tax differential theory. The research used a descriptive research design approach for 12 commercial banks' target population in Kenya. The study used secondary sources to collect data, which are the bank's annual data published on the Nairobi Stock Exchange website. The research used the SPSS software for analyzing the collected data. The results show that the constant dividend pay-out ratio and residual dividend policy are the major determinants of market performance of share prices. Discretional dividend policy does not significantly influence market performance of share prices of commercial banks. The study recommends the commercial banks to constantly make proper dividend decisions to ensure good market performance of the share prices.

Oard Composition, Ownership Structure and Dividend Payout Policy: Evidence from PSX-100 Index of Pakistan

The purpose of this study is to analyze the influence of board composition, ownership structure on dividend payout policy. Ordinary Least Square and Logistic regression models were applied to test the estimation in Pakistani KSE 100-index firms for the period of 2005 to 2014. Corporate Governance (board composition and ownership structure) were taken as independent variables, dividend payout / dividend decision as dependent variables. It is ascertained that the board size, executive director, institutional, foreign ownership and return on equity are significantly influenced on dividend payout /decision. Over study results evidenced that those firms who have higher profitable provide signal to the market to pay higher dividend in Pakistani firms and intended to resolve the agency problems issues.

Pengaruh Keputusan Investasi, Pendanaan dan Dividen Terhadap Nilai Perusahaan

This research was conducted to analyze the effect of investment decisions, funding decisions, and dividends on the value of companies in the manufacturing companies in the food and beverage sector, which are listed on the 2016-2020 Efek Stock Exchange in Indonesia. The sample used in this research is 6 samples of mmanufacturing companies in the food and beverage sector issues listed. The sampling criteria are companies listed on the Indonesia Stock Exchange 2016-2020, companies publishing annual financial reports for the 2016-2020 period in a row, companies having complete financial statement data related to the variables in the study, and the company earned a net profit in the 2016-2020 period. This study aims to analyze and prove empirically the effect of investment decisions, funding decisions, and dividends on firm value. The research data collection method uses secondary data. The sampling method uses the purposive sampling technique. The data analysis method uses multiple regression analysis. Based on the results of the test, it is known that simultaneously, it shows that the investment decisions, funding decisions, and dividend decisions have an effect on the value of the companies in the Indonesian food and beverage sector that are listed in 2016. The results of the partial test show that the investment decision has an significantly positive effect on the value of the company, the funding decision has no significant impact on the value of the company and has an significantly positive effect on this decision.

The impact of the coronavirus pandemic on the dividend target payout ratio. The evidence from Hydrotor SA

Lintner’s (1956) partial adjustment model identifies the company’s long-term dividend policy by setting a dividend target payout ratio and the speed of adjustment. And although the model has undergone various modifications and methods of estimation over more than 60 years, it is still a good tool for analyzing dividend decisions made by companies. The aim of the article is to show the usefulness of the Lintner model for analyzing changes in the company’s dividend policy during the pandemic turmoil. For the illustration, Hydrotor SA was chosen, which, the longest time at the Warsaw Stock Exchange, continuously pays dividends. The calculations showed that the situation in 2020 resulted in a revision of the company’s long-term dividend strategy, which resulted in a lowering of the dividend target payout ratio and a greater attention to the current situation (current net profits)—an increase in the speed of adjustment.

What drives the dividend decisions in BRICS countries?

Research background: We examine the dividend payout policies across companies listed on the main stock exchanges in Brazil, Russia, India, China, and South Africa (BRICS). Unlike the highly developed capital markets, the literature regarding dividend policy on BRICS? stock exchanges is scarce. 
 Purpose of the article: The purpose of this paper is threefold: verification of the existence of dividend smoothing pattern; selection of the significant drivers that affect both dividend levels and dividend smoothing; examination of differences between dividend policy of cross- and single-listed companies.
 Methods: Based on a dataset of 564 companies that paid dividends for at least 11 consecutive years in the period of 1995?2015, we apply a GMM two-step estimator to assess the speed of dividend adjustment (SOA) coefficient. Further we employ the linear panel regression to indicate the individual and market determinants of the dividend levels and SOAs. In the latter case, we base on time series of the SOAs obtained from the rolling estimation technique. Finally, we conduct separate estimations for cross-listed companies.
 Findings & value added: We confirm a moderate level of dividend smoothing within BRICS countries. Among the firm-level characteristics affecting the SOA the most important are: ownership dispersion, age and size of a firm, retained earnings, leverage, long term debt, asset tangibility, liquidity risk ratio, and issuing the depositary receipts (DR). Two relevant market factors are found: market capitalisation and turnover in relation to GDP. Similar characteristics have a significant impact on dividends? levels in the entire sample, whereas in the subsample of cross-listed companies fewer variables are significant. Our paper is the first comprehensive attempt to investigate the dividend policy and determinants of dividend smoothing among BRICS countries.

Does CEO’s Financial Decision Able To Improve Firm Value Of Consumer Good Industry

The purpose of this study was to determine the effect of PER, DER, and DPR financial decisions with CEO as a moderating variable on firm value in the consumer goods industry in 2015-2019. The researcher uses a quantitative approach with quantitative descriptive research and explanatory research. Collecting sample data using purposive sampling method, with the help of software SPSS to do testing statistic analysis. From the results of this study the researchers found that partially, investment decisions have a positive influence in increasing firm value, with the CEO having a positive influence on investment decisions in increasing firm value. And simultaneously Investment Decisions, Funding Decisions, and Dividend Decisions affect the value of the company, with the CEO influencing the three financial decisions on the value of consumer goods industry companies listed on the Indonesia Stock Exchange. with the CEO who has a positive influence on financial decisions on firm value, then it becomes a difference to previous research that has been done on firm value.

Keterkaitan Tata Kelola Perusahaan Non Manufaktur Terhadap Keputusan Dividen

This study aims to determine the effect of ownership structure on dividend policy. The sample used for this research is non-manufacturing companies listed on the Indonesia Stock Exchange during the 2015-2020 period, which total 18 companies. The technique for taking samples in this study is purposive sampling and panel data regression analysis methods. The independent variables used are managerial ownership, board size, board independent and the control variables are profitability, firm size, corporate tax with dividend decision as the dependent variable.

Does Market Power Affect Banking Dividend Policy? Evidence from Nepal

We attempt to explain how market power impacts bank dividend payment behaviors in Nepal by taking the sample from the commercial banking sector employing a panel data regression model. Using the Lerner Index (LI), a non-structural measure of market power or lack of competition, we found that market power inversely but statistically insignificantly affect dividend payment. This finding leads us to conclude that market power-a proxy of more or less competition is not an important and influencing factor to the dividend decisions in commercial banking sectors signifying that competition does not seem helpful in mitigating agency conflicts. It is also concluded that banking dividend payouts are not the result of the punitive influence of product market antagonism. Further, among other firm-specific determinants, bank size and leverage significantly positively whereas asset growth significantly negatively affect the dividend decision. However, profitability is found insignificant determinant of dividend payment. The paper enriches and contributes to the literature on banking dividend payout and helps to identify the key factors that affect banking dividend decision-making. Keywords : Banks, Market competition, Market power, Lerner Index, Nepal

Dividend decisions in family businesses: A systematic review and research agenda

AbstractDividend policy in family businesses has been studied in multiple disciplines within the past two decades. Despite strong growth in this research, both contradictory findings and research gaps were found. This study systematically reviews 47 articles on dividend decisions in family businesses, published between 2001 and 2020 in a wide variety of finance, economics, and management journals. Based on a comprehensive analysis, we provide an overview of the current state in family business literature structuring theoretical thinking on dividend decisions. In addition, we offer a research agenda for the future, containing specific suggestions on research questions, theoretical integration, sampling, and study design. This way, we articulate and spotlight areas where family business and finance scholars may most fruitfully direct their attention, which will in turn advance our knowledge of dividend decisions in family businesses.

Pengaruh Keputusan Investasi, Keputusan Pendanaan Dan Kebijakan Deviden Terhadap Nilai Perusahaan (Studi Empiris Perusahaan Manufaktur yang Terdaftar di BEI Periode 2015-2019)

This study aims to see the effect of investment decisions, dividend decisions and policies on firm value. In this study, company value is measured by PBV, investment decisions as measured by PER, decisions measured by DER and dividend policy as measured by the DPR. This type of research is secondary data from annual reports of manufacturing companies listed on the Jakarta Stock Exchange, and has been published, such as: data from the Indonesia Stock Exchange (IDX), journals, internet www.idx.co.id and related company websites. The population in this study were manufacturing companies listed on the Indonesia Stock Exchange in 2015-2019, with the total number of food and beverage manufacturing companies listed on the Indonesia Stock Exchange as many as 14 companies, so for sample selection all populations were sampled. The analytical method used is multiple linear analysis using SPSS.22 data processing. The results of this study are the effect of positive decisions on firm value, no influence on decisions on firm value, no influence on dividend policy on firm value and investment decisions, funding decisions and policies that simultaneously do not affect firm value.

The influence of board independence on dividend policy in controlling agency problems in family firms

PurposeThis study aims to investigate the impact of board independence on the cash dividend payments of family firms listed on the Borsa Istanbul (BIST) in balancing controlling families’ power to mitigate agency problems between family and minority shareholders in the post-2012 period. The authors focus on this period because Turkish authorities implemented mandatory regulations on the employment of independent directors on boards from fiscal year 2012.Design/methodology/approachThe research model uses a panel dataset of 153 BIST-listed family firms over the period 2012–2017, employs alternative dependent variables and regression techniques and is applied to various sub-groups to improve robustness.FindingsThe empirical results show a strong positive effect of board independence on dividend decisions. The authors further detect that family directorship exhibits a negative effect, whereas both board size and audit committees have positive influences but chief executive officer (CEO)/duality has had no significant impact on the dividend policies of Turkish family firms since the new compulsory legal requirements in the Turkish market.Research limitations/implicationsThe findings suggest that independent directorship and dividend policy are complementary governance mechanisms to reduce agency conflicts between families and minority shareholders in Turkey, which is a civil law-based emerging country characterized by high family ownership concentration.Practical implicationsThe authors present evidence that Turkish family firms’ corporate boards have evolved, to some extent, from being managerial rubber stamps to more independent boards that raise opposing voices in family decision-making. However, independent directors’ preference for dividend-induced capital market monitoring implies that their direct monitoring is less effective than it is supposed to be. This suggests a need to revise the Turkish Corporate Governance Principles to enhance independent directors’ monitoring and supervisory power.Originality/valueThis is thought to be the first study to provide insights on how board independence influences dividend policy in controlling agency problems in Turkish family firms since Turkish authorities introduced compulsory rules on the employment of independent directors on boards.

The influence of financial constraint on peer influence of cash dividend decision – Evidence from China

Abstract We analyse the influence of financial constraints on the peer effect of dividend decision in China by employing the Carhart four-factor model to construct instrument variables of peer influence. We find that (1) the decision of whether to pay cash dividends (DIV) is significantly influenced by peers, and the estimated marginal effect is 0.53%, but the question of whether to pay catering dividends and the extent of such dividends to be paid are not significantly affected by peers. (2) Under the semi-mandatory dividend policy in China, financial constraints will significantly reduce peer influence on the dividend level. (3) Peer influence on DIV is more pronounced among companies that face high financial constraints.