Dividend Payout Policy Research Articles

DETERMINAN KEBIJAKAN PEMBAYARAN DIVIDEN

This research aims to analyze the influence of corporate governance, tax avoidance, and leverage on companies' dividend payout policies. In this study, corporate governance is measured by the scoring method; tax avoidance measured by the current ETR; leverage used by the debt to asset ratio is used, and the dividend payout ratio is used to measure dividend payments. Using all companies listed on the Indonesia Stock Exchange and have a dividend payment policy for 2014-2018, this research Eviews version 11 as data analytic. The results show that there are a significant negative influence of tax avoidance and leverage to dividend payout policy. Meanwhile, no significant influence was found between governance and dividend payout policy.

Faktor Yang Mempengaruhi Dividend Payout Policies Pada Perusahaan Manufaktur Di BEI

The purpose of this study is to empirically examine the influence of corporate debt, corporate size, sales growth, and ROA on dividend payout policies in manufacturing industry that listed in BEI from the period 2017 – 2019. Sample selected using purposive sampling method with total 104 data from 38 companies. Data processing techniques using multiple regression analysis. This research used EViews 10 and Microsoft Excel 2016 to analyse the data. The result shows that corporate size and ROA have a positive significant effect on dividend payout policies. Corporate debt and sales growth have a negative insignificant effect on dividend payout policies. The research implication shows the importance of management to manage finances more effectively and efficiently, so that they are able to earn profits and be able to distribute dividends to attract investors to invest.

Reporting of discontinued operations and dividend payout policy

Purpose This study aims to examine the relationship between the types of discontinued operations (i.e. income-increasing versus income-decreasing) and a firm’s dividend payout policy. The authors extend our analysis to examine whether equity investors react differently to dividend payout changes that are preceded by the reporting of different types of discontinued operations. Design/methodology/approach Ordinary least squares regressions are used to test the association between discontinued operations and dividend payouts. The investor response test uses cumulative abnormal return around the announcement of dividend payout changes. Findings The authors find that firms temporarily increase (decrease) their dividend payout in the quarter following the reporting of income-increasing (income-decreasing) discontinued operations. The authors further find that these results are stronger when the magnitude of the income increase or income decrease is larger and when firms report disposal gains or losses. Although prior literature finds evidence that dividend increases are associated with a significant positive market reaction, the results show that investors do not react positively to dividend increases that are preceded by reporting income-increasing discontinued operations. Originality/value This study adds to the literature on the effects of financial reporting (i.e. the types of discontinued operations) on a firm’s payout policy (i.e. dividend payout). The authors also add to the literature that examines investors’ perceptions of a firm’s payout changes when such changes are transitory in nature.

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.

The impact of board composition and ownership structure on dividend payout policy: evidence from Saudi Arabia

PurposeThis study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.Design/methodology/approachThe paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.FindingsThe results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.Research limitations/implicationsThis study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.Originality/valueThis paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

Impact of Corporate Governance on Dividend Policy: Evidence from Pakistan

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.

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.

Carbon risk and corporate investment: A cross-country evidence

This paper investigates the effect of carbon risk on corporate investment using data from 41 countries for the period 2002–2017. There is strong evidence showing that the impact of carbon risk on corporate investment is negative and statistically significant. Carbon risk also reduces investment inefficiency. We find that carbon-intensive firms are affected more severely compared to carbon-non-intensive ones. Further, the effect depends on the level of a firm's financial constraints, where it is stronger in firms with financial constraints measured by firm size, age, KZ index, and dividend payout policy. Our findings remain consistent in several robustness tests.

Dampak Tata Kelola Perusahaan Terhadap Kebijakan Pembayaran Dividen Pada Perusahaan Manufaktur

This research paper scrutinizes the influence of corporate governance which was one of the determinants of dividend payments policy. A total of 195 manufaturing companies listed on Indonesia Stock Exchange used for sampel on this research and using 5 years period start from 2016-2020. The data used in this paper is secondary data and the sampling method is using purposive sampling method. The panel data regression methode is used for this research to test the influence of independent variable toward dependent variable. The outcame of this study reveal that board gender diversity and return on asset ratio (ROA) have negative effect on dividend payout ratio (DPR). However, board size and leverage have no effect on dividend payout ratio (DPR). This research expected to provide an information and overview to investor in making investment decision to pay attention to coporate governance because it's has an impact on the firm's dividend payout policy.

Do multinational firms respond to personal dividend income tax rates?

This study examines the effect of investor-level income taxes on profit repatriation and dividend payout policies of multinational firms. The empirical estimations include two million firm-year observations in 130 countries. By augmenting the Lintner model of dividend payments, I employ parametric as well as semiparametric techniques to provide evidence that income taxes on dividends neither alter dividend payments to investors nor within-firm dividend payments. These results remain robust to a wide range of alternative specifications.

Does gender diversity on firm\u2019s board affect dividend payouts? Evidence from India

This study attempts to determine whether gender diversity on the firm's board affects the dividend payout ratio concerning firms listed on Nifty 50 in India. Multiple regression analysis and the logit model have been employed. The dependent variable is the dividend payout policy of the firm, and the independent variable is gender diversity. The regression model incorporated control variables that have been popularly listed in the extant literature. The robustness of the results has also been tested. It was found that there exists a positive association between the percentage of female directors and the dividend payout ratio. Results also found that there is a positive impact of the number of female directors on the dividend to total assets. This implies that gender diversity on board positively affects the payout ratio of firms. This study is the first of its kind to investigate the association of gender diversity on the firm's board and dividend payout ratio.

Corporate Governance and Dividend payout Policy: Mediating Role of Leverage. Evidence from Emerging Economy

This study seeks to explore the relationship between corporate governance and dividend payout policy Mediating role of leverage between corporate governance and dividend payout in PSE 100 index nonfinancial firms is also explored. Relationship between corporate governance with dividend payout and leverage as determinant of dividend is already established but mediating role of leverage is checked for the first time. CEO duality, audit committee, number of meetings, independent directors and board size are taken indicators of corporate governance. The empirical results show that leverage plays mediating role between corporate governance and dividend payout policy when CEO is not holding the office of Chairman BOD and audit committee exists. Board size is significantly and positively related with leverage and the leverage is significantly and negatively related with dividend payout ratio. Result reveal that if a company has audit committee and CEO is separate from chairman board of directors and want to increase the dividend payout then the company will have to decrease its leverage. Empirical results show that board size is significantly and positively related to leverage and leverage is significantly and negatively related to dividend payout. So the company will have to keep its board size minimum to minimize the leverage and maximize dividend payout if it is willing to pay higher dividends. On the other hand, it is found that the investors who opt to purchase shares with the intent to receive higher dividend they will have to select a company with minimum board size. It is revealed from the empirical results that smaller board size keeps the leverage minimum and consequently dividend will be maximum.

Three Corporate Finance Practices in Pakistan: A Review of Previous Studies and Way Forward

This study reviews the empirical studies arranged on Pakistani capital market and specifies the pattern of three corporate finance practices. The subject of corporate finance discusses the various activities performed at firm level such as capital budgeting, capital structure, and dividend payout policy. The capital budgeting technique consists of six methods i.e., net present value, discounted cash flow, payback period, and internal rate of return etc. but Pakistani firms often interested in net present value and internal rate of return for capital investment evaluation. Similarly, the capital structure decision carries the debate on two options of financing i.e., debt financing and equity financing but literature shows that the Pakistani firms generally follow the pecking order theory and prefer more debt financing. Similarly, as for concern dividend payout policy, literature discusses the different theories and determinants but still unable to generalize the dividend payout trend specifically in Pakistani context. Corporate managers and policymakers can use the conclusion for strategic purposes.

Corporate life cycle and dividend payout: A panel data analysis of companies in an emerging market

Background: The dividend payout policy remains one of the key functional areas of corporate finance because it is through receipt of dividends that shareholders can share in the profits of their investments. Amongst the dividend payout theories that have been developed over the decades, the life-cycle hypothesis has received little attention in research.Aim: The aim of this study was to test the dividend life-cycle hypothesis in the South African contex.Motivation for the study: Justification for this study in the context of South Africa is that there is minimal research in this regard in emerging economies. South Africa presents a good platform for this research because it is amongst the highly regarded emerging markets and this has been confirmed by its representation in Brazil, Russia, India, China and South Africa (BRICS) countries. Hence, results in this regard would shed some light in the form of a relative representation of overall emerging markets trend.Research approach/design and method: A panel data of 119 Johannesburg Stock Exchange (JSE) listed sample companies were used to test the hypothesis during the period 2006–2015. A combination of basic and dynamic panel data estimators was used to analyse the data.Main findings: The study finds that the dividend life-cycle hypothesis is prevalent amongst South African companies. Specifically, it was observed that the considered companies pursuing growth projects paid less dividends. Furthermore, the growth companies have shown to be more aggressive in their pursuit for growth and hence are able to create more value for shareholders than value for companies.Managerial implications: Financial managers will be afforded with enhanced decision alternatives in respect of their fiduciary duties towards the shareholders in respect of maximising value.Conclusion: These results provide a mirror image of those of the developed markets and a good context for future research in the same area in an emerging economy setting.

Dividend Payout Policy and Global Financial Crisis: A Study on Malaysian Non-Financial Listed Companies

Manuscript type: Research paper Research aims: This paper examines the impact of the global financial crisis on Malaysia non-financial index firms’ dividend policies. Design/Methodology/Approach: This paper used panel data of 495 firm-year observations of Malaysian non-financial index firms from 2006 to 2016. Research findings: Our findings indicate that firms adjust their dividend policies during the pre-crisis and post-crisis periods; more profitable and larger firms are more likely to distribute their dividend payouts, whereas firms with higher leverage are more likely to omit their dividends. Moreover, dividend policies that will increase firms’ valuation are adopted in Malaysia. This is reflected in the signalling theory with evidence that higher profitability exerts a positive influence on firms’ propensity to increase and/or maintain dividends over different study periods, implying that markets attach a high valuation to firms that can pay, especially during the crisis period. We also find the role of catering theory and smoothing hypothesis lost relevance in both crisis and non-crisis periods. Thus, the catering theory and smoothing hypothesis were not supported in Malaysia. Theoretical contribution/Originality: This study investigates the impact of the global financial crisis on Malaysia non-financial index firms’ dividend policies. This paper suggestion can act as a catalyst to more comprehensive and detailed researches and studies on dividend policy in any economic landscapes. Practitioner/Policy implications: This paper may also guide companies on the structure and use of dividend distribution over the precrisis, during the crisis, and post-crisis periods. Research limitation/Implications: One limitation of the study is that the measures used for dividend payout determinants are only based on the theory investigated. These measures may not completely reflect all the payout determinants. Future research could address this limitation by employing other factors in the study of dividend policy such as inflation, economic growth, and corporate governance.

Relationship between Board Characteristics and Dividend Payment Policies

Objective: To investigate the relationship between corporate governance board characteristics and dividend pay-out (e.g. dividend pay-out ratio).
 Method: A panel regression analysis was undertaken to investigate the relationship between corporate governance board characteristics and dividend pay-out (e.g. dividend pay-out ratio). Data was collected from a sample of 29 firms in the top-40 of the Johannesburg Stock Exchange (JSE). Data collected spanned for a period of five years from 2013 – 2018
 Results: Obtained result demonstrate that there is a significant relationship between board diversity, as measured by ethnicity, the board independence and the dividend pay-out ratio.
 Originality/Relevance: Previous studies have asserted that corporate governance affects the level of dividends paid out by a firm. What has remained unclear with the previous studies is whether the dividend pay-out is an outcome or a substitute for effective governance. 
 Theoretical/methodological contributions: The results suggest that there is a strong evidence in favour of the substitution hypothesis, where JSE top 40 boards with a higher degree of independence did not need to use dividends as a tool for monitoring managerial behaviour. The results illustrate evidence supporting the maturity and dividend smoothing theories, and this is observed through the significant relationships established between profitability, previous dividend and the dividend pay-out ratio.
 Social/management contributions: The main contribution of this study being the establishment of the determinants of dividend pay-out policy in South Africa’s JSE listed companies.

The Relationship between Board Characteristics and Dividend Payment Policies

Objective: To investigate the relationship between corporate governance board characteristics and dividend pay-out (e.g. dividend pay-out ratio). Method: A panel regression analysis was undertaken to investigate the relationship between corporate governance board characteristics and dividend pay-out (e.g. dividend pay-out ratio). Data was collected from a sample of 29 firms in the top-40 of the Johannesburg Stock Exchange (JSE). Data collected spanned for a period of five years from 2013 – 2018 Results: Obtained result demonstrate that there is a significant relationship between board diversity, as measured by ethnicity, the board independence and the dividend pay-out ratio. Originality/Relevance: Previous studies have asserted that corporate governance affects the level of dividends paid out by a firm. What has remained unclear with the previous studies is whether the dividend pay-out is an outcome or a substitute for effective governance. Theoretical/methodological contributions: The results suggest that there is a strong evidence in favour of the substitution hypothesis, where JSE top 40 boards with a higher degree of independence did not need to use dividends as a tool for monitoring managerial behaviour. The results illustrate evidence supporting the maturity and dividend smoothing theories, and this is observed through the significant relationships established between profitability, previous dividend and the dividend pay-out ratio. Social/management contributions: The main contribution of this study being the establishment of the determinants of dividend pay-out policy in South Africa’s JSE listed companies.

Financial Constraints and the Sustainability of Dividend Payout Policy

This article investigates the relation between dividend payout policy and financial constraints, focusing on the Italian SMEs between 2015 and 2019 and adopting credit ratings as a measure of access to external financial resources. According to our findings, there is a positive relation between firm solvency and the payment of dividends, suggesting that, when companies’ financial constraints are higher, we can expect lower odds that they will pay out dividends. Nevertheless, there is also evidence that younger SMEs are interested in signaling their expected profitability to attract future investors and support access to the capital market.

Dividend policy-performance nexus: PMG-ARDL approach

This paper examines the long run and short run link between dividend payout policy and corporate performance of quoted companies in Nigeria over the period 2001–2018. The study employs data of 80 listed companies collected from the audited financial statements of the companies and the publication of Central Bank of Nigeria. Using Pooled Mean Group-Autoregressive Distributed Lag approach, the result shows that dividend policy negatively and statistically influence performance in the short run, while in the long run the effect is positive and significant.

Optimal risk exposure and dividend payout policies under model uncertainty

This paper investigates a combined optimal risk exposure and dividend distribution decision making problem in presence of model uncertainty. In the context of model uncertainty, the decision maker regards the reference model (fitted by observed information) as an approximation to the true model and believes that the true model exists in a family of alternative models surrounding the reference model. The aim is to find a robust strategy of risk exposure and dividend payments, which maximizes the expected cumulative discounted dividends until ruin plus a “penalty” on the distortion between the reference and alternative models in the worst-case scenario. We provide explicit expressions for the value functions and derive the respective optimal strategies explicitly. We show that the optimal dividend strategy is always of a barrier type and that it is optimal to retain full risk when the surplus is large. We also find that when the insurer is more averse to ambiguity, her optimal strategy on risk retention and dividend payout is more conservative.