Dividend Payments Research Articles

The Carrot and the Stick: Bank Bailouts and the Disciplining Role of Board Appointments

We empirically examine the Capital Purchase Program (CPP) used by the US government to bail out distressed banks and its implications for regulatory policy. We find strong evidence that a feature of the CPP—the government’s ability to appoint independent directors on the board of an assisted bank that missed six dividend payments to the Treasury—had a significant effect on bank behavior. Banks were averse to these appointments—the empirical distribution of missed payments exhibits a sharp discontinuity at five. Director appointments by the Treasury were associated with improved bank performance and lower CEO pay. (JEL G21, G28, G32, G34, G35, G38, H81)

Analyzing the Influence of Dividend Policy on Corporate Value: A Financial Perspective with Haier as a Case Study

The dividend policy plays a pivotal role in stabilizing stock prices and sustaining investor enthusiasm for listed companies. It not only significantly impacts the interests of management, investors, and creditors but also has long-term implications for the company's development. However, most studies on Chinese enterprises' dividend policies primarily rely on empirical research methods, with limited literature available on individual companies. The utilization of a case analysis methodology in this study has significantly enhanced the research cases related to China's dividend policies, thereby providing valuable insights for the advancement of analogous industries and the formulation of future dividend policies. In this study, Haier Smart Home Co., Ltd. (referred to as "Haier"), a publicly traded company on the Shanghai Stock Exchange, is selected as the case study subject in order to examine the impact of dividend policy on corporate value from a financial perspective. Through an analysis of Haier's dividend allocation data from 2008 to 2022 and an evaluation of various financial indicators during this period, we find that a stable dividend payment level can effectively sustain the enterprise value of the company. Therefore, it is recommended for listed companies to optimize their ownership structure and enhance corporate governance while strategically formulating dividend policies aligned with their financial performance and corporate strategy.

DIVIDEND POLICY IN MAINLAND CHINA AND THE US: A STUDY ON NON-FINANCIAL LISTED COMPANIES

This paper aims to assess the common characteristics of dividend payers and non-payers in both China and the US, as well as the stability of dividend policies in each respective nation. The study addresses issues related to catering theory, signal theory, smoothing assumptions, and Fama-French hypotheses. Our analysis covers 509 non-financial firms during the period 2006-2016, comprising 419 firms from the US and 90 firms from China. The multinomial regression reveals that past dividend payouts are critical in explaining dividend policy in both the US and China. Firms that have consistently paid higher dividends in the preceding year are more likely to opt for dividend increases rather than omitting dividends, thus aligning with the dividend smoothing hypothesis. Additionally, firm size and stock market performance were found to be significantly influencing dividend payouts across different categories in both the US and China. However, US firms primarily drove dividend payouts through profitability and the dividend premium, while firm size and leverage heavily influenced Chinese dividends. Interestingly, Chinese firms appear to practice a less sticky dividend policy than US firms, implying that the role played by dividend policy in signalling and catering theories in China is less significant than in the US.

A Study on performance of companies issuing bonus shares

The study provides a succinct overview of the findings from an in-depth analysis of bonus shares performance among selected Indian companies over the past two years. The study focused on assessing under pricing trends, post-listing shares performance, sectoral variations, investor sentiment dynamics, and regulatory impacts. The analysis revealed that many bonus shares experienced significant under pricing at their initial listing, particularly notable in high-demand sectors like technology.Shares performance varied across sectors, with companies like private and public sector shares performance over the long term. This suggests effective bonus shares . Moreover, the study identified positive shifts in bonus shares ,companies encourage more retail investors participation in their stock by lowering the price per shares and adding liquidity. And provide an alternative to issuing a dividend payment for rewarding investors and finally they reflect that the company is in a financially sound position to keep growing and generating shareholder value . In the study we have taken 5 shares which announced bonus last year and analzse the return we observed positive return in the sample taken. Bonus shares represent a critical juncture in a lifecycle of company, its transition marking from private ownership to becoming a traded publicly entity. For companies, bonus shares offer opportunities to access capital markets, fund expansion initiatives, and strengthen market position. For investors, bonus shares provide avenues for portfolio diversification and potential capital appreciation, albeit with associated risks. Analyzing bonus shares performance helps in identifying key success factors and challenges faced by companies in navigating the complexities of the Indian capital market. This study aims to comprehensively analyze and compare the bonus shares performance of the following 5 Indian companies: Power finance Power grid Safari Sonata Berger paints The objectives include evaluating their initial market reception, post-listing price movements, and strategic implications for stakeholders. By examining these bonus shares issues, we aim to discern trends, drivers of success, and challenges faced by companies across diverse sectors in Indian market.

Limited Firm Insurance and Aggregate Implications

This paper studies the impacts of financial shocks on firm insurance, firm dynamics, and macroeconomic implications. A key departure from the literature is that firms provide wage insurance contracts to risk-averse workers in a long-term relationship. Such contracts endogenously impose a form of inflexible debt liability to firms, and make firms with limited financial net worth more vulnerable to shocks than others. In our model, firms have heterogenous productivity and financial net worth, and also firms face financial frictions. Search and matching in the labor market endogenously determines the value of wage contract, and thus the level of liability to the firm. We have three new findings: (1) The wage dynamics of the quantitative model are consistent with those in empirical studies, with significant insurance against firm-level idiosyncratic shocks, and also a weak comovement between aggregate wage and GDP when there are aggregate shocks. (2) Firms with limited financial resources are hit by financial shocks significantly more than others, with larger negative impacts on dividends, credit borrowing, firm value, and firm entry; the endogenous wage insurance also becomes more limited, and there are more separations. These impacts on both firms and workers are different from—and cannot be accounted for by—standard models with a representative firm or worker. (3) Quantitative exercises for the Great Recession in the United States suggest that aggregate productivity shocks and financial shocks play different roles; without financial shocks, we cannot account for the dynamics of financial variables, including the reduced credit borrowing, spikes in credit spreads, and large drops in dividend payments. Lastly, we provide microlevel empirical supports for our model implications. This paper was accepted by Lukas Schmid, finance. Funding: Y. Wang acknowledges the financial support from the National Natural Science Foundation of China [Grant 72150003] and the grant from Shenzhen Municipal Government [Grant 1210614103]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.01627 .

The Impact of Dividend Payments on Stock Price: Empirical Evidence From Companies Listed on the Brazilian Stock Exchange

The Impact of Dividend Payments on Stock Price: Empirical Evidence From Companies Listed on the Brazilian Stock Exchange

Dividend mispricing: Evidence from all‐stock merger deals

AbstractStock prices of targets in all‐stock merger deals should reflect acquirer share values, net of expected dividend payments before deal completion. This setting provides a unique opportunity to examine whether market prices of target stocks reflect the price reducing impact of impending acquirer dividends. We find evidence that target stock returns on the acquirer ex‐day are negatively related to the size of the dividend payments, indicating an incomplete adjustment on the last cum‐day. However, given the size of typical quarterly dividends, the magnitude of the estimated 30% incomplete adjustment to the dividend does not represent a viable arbitrage opportunity. Examining a longer window, we find that roughly 70% of the acquirer dividend is incorporated into the target stock price in the period two days after the dividend announcement to the ex‐day. Overall, our results are consistent with target stock prices adjusting slowly over time to reflect impending acquirer dividends.

Анализ показателей российского финансового рынка

The financial market is a key factor in economic development, an important tool for the redistribution and transformation of investment resources, as well as a litmus test of the state's economic health. The peculiarity of the Russian financial market is its "youth" and "inexperience" in comparison with the markets of developed economies, the path of trial and error, inconsistency in the context of the uniqueness of the financial system of the Russian Federation. This market is particularly vulnerable and volatile in the face of sanctions and global economic turmoil, so it needs competent targeting guidance, effective tools and verified coordination methods and techniques. The fundamental problems of the Russian financial market are quite deep and do not always appear on the surface, which requires an in-depth and permanent tactical and strategic analysis of factors, causes, trends, trends and indicators that can correct the situation in a timely manner in any economic scenario in manual management. The article examines the main features, rallies, features and directions of the development of the financial market of the Russian Federation at the present stage. The analysis of the issuer's statements for 2005–2023, dividend payments for the same period is presented, the dynamics of growth of the segment of mutual funds and exchange-traded mutual funds is considered. A comparative structure of household financial assets in 2017 and 2023 is proposed, the share of different organizational and legal forms of joint-stock companies in the total number of joint-stock companies in 2019–2023, the share of different groups of banks in the value of assets of the Russian banking system in 2000–2023 is given. The final results of the study substantiate the importance of the role of the state as a regulator of the stock market, emphasize its Russian functions, and highlight its conceptual problems. The research is based on the analysis of foreign and Russian publications, as well as on statistical conclusions of financial and statistical data.

Testing of Semi Strong form of Market Efficiency of Indian Capital Market with Reference to Annual Dividend Announcement

The investment decision is influenced by many factors, of which one such factor is the return. The shareholders may get the return in the form of dividends which affects the share prices. The behavior of stock prices is unpredictable as price movement for different activities will move in different ways. The stock price influence activities can be divided into economic and corporate activities. The impact of economic activities will be more or less the same on all the stock prices, while the impact of corporate action varies from one stock to the other. Dividend payment is one of the essential corporate actions that will impact the behavior of stock prices. This research highlights the impact of dividend payment one the behavior of stock prices and their abnormal returns.

The Impact of Competitive Relations on the Issuers’ Dividend Policy

Purpose: The aim of the research is to analyse the impact of indicators of market position and financial stability of companies as determinants of competitiveness on dividend policy. Methodology: The research employed the methods of correlation analysis, multivariate regression, and statistical analysis. Findings: As a result of the study, two indicators characterizing dividend policy and eleven indicators were identified as determinants of companies’ competitiveness. It was established which determinants of competitiveness have a close connection and significant impact on the dividend policy. It was found that for Lenovo, P/B ratio (–0.69) has the greatest impact, Dividend Yield, variables not included in the model (0.62), Annual revenue (1.18), Net assets by year (0.93) — on Annual dividend payments. For ASUS, Total debt by year (0.88) has the greatest impact on Dividend Yield, Total liabilities (0.36) and Total debt (0.63) - on Annual dividend payments. Originality: The results indicate that ASUS actively uses debt policies in the competition for investors, while Lenovo follows a more conservative approach. The results may be useful for investors when choosing companies to invest in. Research prospects may be aimed at investigating the relationship between dividend policy and global macroeconomic phenomena.

Using a signal model for the Timing of Dividend Payment: the French case

Fixer et publier la date de paiement des dividendes est une décision très importante dans le cycle de vie de l’entreprise. À notre connaissance, peu de méthode statistique ont tenté de résoudre ce problème à travers la littérature. Cette étude contribue à la littérature sur l’évaluation de la date de paiement des dividendes à travers les modèles de signaux. Nous utilisons un modèle de signal pour confirmer si la date de paiement du dividende peut être considérée comme un signal. Nous utilisons une base de données de 168 sociétés cotées commerciales et industrielles françaises entre 2003 et 2008. Notre résultat principal est : le moment de mise en paiement du dividende est utilisé comme un signal des dirigeants aux investisseurs car cette date est proche de la date de l’assemblée générale.

Improving Customer Experience Through Differentiation Capability: The Rise of Competition Among Africa’s Consumer Goods Companies

Competitive advantage is one of the essential components of customer satisfaction and business growth, but the COVID-19 pandemic has had a substantial influence on consumer behavior, while also giving rise to intense competition within the business environment in Africa, making competitive advantage and customer experience a challenge. Consequently, firms have been compelled to make strategic choices such as differentiation capability to navigate these challenges. The study therefore examines the effect of differentiation capability on the customer experience of selected consumer goods companies listed in Nigeria the biggest economy in Africa. The research adopted a cross-sectional survey method, and a total of 20 consumer products firms were identified and evaluated based on their capitalization criteria and continuous dividend payments. From this group, seven companies were chosen for further analysis. The sample size of 378 was determined using the Research Advisor Table, with a confidence level of 95% and a margin error of 5%. To address the issue of non-response, appropriate measures were taken, leading to the inclusion of an additional 113 respondents, representing 30% of the original sample. This adjustment resulted in a final sample size of 491. A total of 491 questionnaires were sent to the respondents, resulting in a response rate of 97.76%. The hypothesis was examined by regression analysis. The results of the study indicate that differentiation capability is an effective tool that is statistically significant and positive to customer experience (β =0.842, t = 29.782, p<0.05); The research findings indicate that applying differentiation capability in a firm helps attain a stronger competitive position and has a favorable impact on customer experience. This research, therefore recommends that there is a need for technology adoption to cut production costs and establish a durable competitive advantage.

Optimal dividend policy with self-exciting claims in the Gamma–Omega model

In this paper, we consider the optimal dividend policy for an insurance company under a contagious insurance market, where the occurrence of a claim can trigger sequent claims. This clustering effect is modelled by a self-exciting Hawkes process where the intensity of claims depends on its historical path. In addition, we include the concept of bankruptcy to allow the insurance company to operate with a temporary negative surplus. The objective of the management is to obtain the optimal dividend strategy that maximises the expected discounted dividend payments until bankruptcy. The Hamilton–Jacobi–Bellman variational inequalities (HJBVIs) are derived rigorously. When claim sizes follow exponential distributions and the bankruptcy rate is a positive constant, the value function can be obtained based on the Gerber–Shiu penalty function and the optimal dividend barrier can be solved numerically. Finally, numerical examples are demonstrated to show the impact of key parameters on the optimal dividend strategy.

A Stakeholder Perspective on Indian REIT Regulations

This study examines the effectiveness of the regulatory framework of Indian real estate investment trusts (REITs). Interviews were conducted with 30 industry experts using semi-structured questionnaires. The feedback from the interviews was systematically analyzed using content analysis. The original data were categorized into first-level codes and zero-order codes, and further, these codes were used to identify overarching themes. The results indicate that India’s existing REIT model is functional and similar to comparable countries, such as the United Kingdom, France, Ireland, and China. However, there is a scope for improvement. To attract retail investors, it is suggested that tax regulations of REITs should be simplified, with a specific focus on the bifurcation of interest and dividend payments to the investors. The results also suggest that the interest received as loan repayment should be deducted from the initial acquisition cost to reduce the investor’s capital gain. The study recommends the integration of REITs into the Realty Index to increase investors’ confidence. It also suggests revising the treatment of security deposits from the Net Distributable Cash Flow (NDCF), as it is not a direct income of the REIT. These suggestions contribute to filling the gap in the existing literature on Indian REITs. It also offers practical suggestions for policymakers to improve regulatory frameworks and improve investors’ confidence.

Industry Effects in the Dividend Initiation Decision

We examine industry effects on the likelihood and level of dividend initiations. Results suggest that firms incorporate industry expectations for dividend levels and growth into the initiation decision. They are in general less likely to initiate a dividend if dividend levels in the industry are high or growing. Firms that do initiate seek to match industry peers in initiation levels. We also find that announcement returns to dividend initiating firms are lower when more industry peers are dividend payers and when industry dividend growth is high. Together, these results provide support for an industry equilibrium dividend policy.

Pengaruh Volume Penjualan Saham, Profitabilitas, Solvabilitas, Earning Volatility dan Tranding Volume terhadap Volatilitas Harga Saham dengan Kebijakan Deviden sebagai Variabel Mediasi

This research aims to determine the effect of share sales volume, profitability, solvency, earnings volatility and trading volume on share price volatility with dividend policy as a mediating variable in food and beverage companies listed on the Indonesia Stock Exchange for the 2017-2021 period. The sample for this research consisted of 55 companies, using a purposive sampling method with the criteria stating dividend payments for 5 consecutive years. The research results show that debt ratio, return on assets, trading volume have an influence on stock price volatility. However, earnings volatility and share sales volume have no effect on share price volatility. Dividend policy is able to mediate share sales volume on stock price volatility, dividend policy is able to mediate profitability on stock price volatility, dividend policy is able to mediate solvency on stock price volatility, dividend policy is able to mediate earnings volatility on stock price volatility and dividend policy is able to mediate volume trending on stock price volatility in food and beverage companies listed on the Indonesia Stock Exchange for the 2017-2021 period.

Free Cash Flows and Corporate Buybacks: A Study of Indian Firms

The present research examined the effects of cash flow volatility on the buyback decisions of Indian firms. The sample constitutes 179 Indian companies listed on the Bombay Stock Exchange from 2012-2020. Firms have been divided into two sets, i.e., permanent and volatile cash flow firms. Across these two sets, the study determines the major factors affecting their buyback decisions. The results of ordinary least square regression suggested that when firms have fluctuating cash flows each year, they prefer to opt for repurchases than dividend payments. Further, stock undervaluation is the key determinant of repurchases decisions. Thus, firms with constant cash flows are not highly motivated for buyback decisions. Further, the study explored that larger the size of the firm, lower is the tendency to repurchase shares. Large, manufacturing and mature firms with consistent cash funds are more strongly tended towards repurchases. Correspondingly, such companies engaged in buybacks because of their low market-to-book ratios and high information asymmetry. As cash based firms become more old, their propensity to purchase equity reduces.

The Effect of Company Risk and Company Complexity on Audit Fees with Moderation of Dividend Payment Policy

This study aims to determine: (1) The effect of company risk on audit fee, (2) The effect of company complexity on audit fee, (3) The effect of company risk on audit fees moderated by dividend payment policy, (4) The effect of company complexity on audit fees moderated by dividend payment policy. Population in this research ar e nonfinancial companies listed in Indonesia Stock Exchange (IDX) in 2020 – 2022. The sample is determined based on Stratified Random Sampling method with a total sample of 10 companiees. The data used in this research is secondary data. The technique of collecting data by the method of documentation at www.idx.com and the official website of each company. The analytical method used is multiple regression analysis. The result showed that: (1) Company risk influence a significant positive on audit fee, (2) Company complexity no significant effect on on audit fee, (3) Company risk no significant effect on audit fees moderated by dividend payment policy (3), and (4) Company complexity no significant effect on audit fees moderated by dividend payment policy.

Corporate earnings, dividend payments, and stock price behavior of manufacturing firms listed in Nigeria

The purpose of the study is to investigate the effects of corporate earnings and dividend payments on the stock price behaviour of manufacturing firms in Nigeria between 2013 and 2022. The study adopted an ex-post facto research design, and deployed Generalised Method of Moments (sys-GMM) and Granger causality tests for the data analysis. The two-step system GMM is used to control for omitted variables such as bias, unobserved panel heterogeneity or heteroscedasticity, autocorrelation within panels or groups, endogeneity issues, and measurement errors in the data. Findings show that share price (SP) and its predictors yield valuable insights into the factors influencing stock valuation. Dividend per share (DPS) emerges as a significant positive predictor, suggesting a notable impact on share price. Firm size (FSZ) proves to be a statistically significant predictor, indicating that the size of a firm plays a role in influencing stock prices, with larger firms associated with a decrease in share price. Conversely, Earnings per Share (EPS) and Dividend Yield (DY3) do not exhibit statistical significance, suggesting limited predictive power in the model. By way of conclusion, the study provides an understanding of the factors influencing share price behavior within the Nigerian manufacturing sector and the positive impact of past performance, particularly lagged share prices, confirming the persistence of stock market trends. The practical implications of this study are that it underscores the understanding of financial dynamics in emerging economies, particularly in the context of manufacturing firms in Nigeria.

Administrative and legal forms and methods of countering violations of public interests in the activities of institutional investors

The article is devoted to the formation of scientifically based recommendations on the application of administrative and legal forms and methods of countering violations of public interests in the activities of institutional investors. The author separates the concepts of preventing violations and countering violations of public interests in the activities of institutional investors, indicating that the prevention of violations of public interests takes place when certain shortcomings or problems are identified in their work, which potentially carry a risk of violating the rights of citizen investors, but at a specific moment do not yet pose a threat of violation or are not a violation of public interests. In contrast to prevention, counteraction conditionally assumes the existence of a certain illegal action, as a result of which a situation arises when the interests of citizen-depositors and the institutional investor (his officials) do not coincide, and the private business or selfish interest of individuals begins to dominate over the public interest. According to the author, the system of countermeasures includes such forms of management activity as: issuance of normative legal acts, execution of legally significant actions, which are implemented through such methods as administrative supervision, administrative control, bringing to legal responsibility. Special laws define a number of measures that can be applied to institutional investors for violations, in particular, the suspension or cancellation of a license, the prohibition of the payment of dividends, an injunction and much more, which allows for the timely protection of public interests and the prevention of encroachment on public values, because criminal activity undermines the existing legal order of investment activities of institutional investors and in general the trust of citizen-investors in the state, in its ability to protect their values, entrusted to entities authorized by the state to preserve and multiply them.