Dividend Payout Rate Research Articles

ANALYZING FINANCIAL RATIOS' IMPACT ON STOCKS RETURNS: CASE STUDY OF LQ45 INDEX 2014-2023

This study examines the correlation between fundamental financial metrics and stock returns of Indonesia's LQ45 Index over a 10-year period (2014-2023). The study aims to provide actionable insights for investors and companies by identifying the most critical financial metrics in predicting stock price movements. By analyzing data from 16 consistently listed Indonesian companies, the study focuses on stocks that have consistently maintained their position in the index over the past decade, a gap that has been underexplored in prior research. The study employs various statistical tests to validate the regression model, with hypothesis testing conducted through t-test and F-tests to determine the significance of financial ratios on stock returns. The analysis shows that Return on Equity, Price to Earnings Ratio (PER), Price to Book Value (PBV), Free Cash Flow per Share to Price (PFCF), and Dividend Payout Rate (DPR) have a significant positive effect on stock return. The research recommends that retail investors prioritize the PFCF ratio when evaluating potential stock investments. Transparency in financial reporting is essential, with companies encouraged to provide accurate and comprehensive financial statements, including clear reporting of key financial metrics, to build investor confidence.

Influence of Dividend Payout Rate on Financial Performance of Selected Listed Companies

The purpose of this study was to investigate the effect of dividend payout on financial performance of selected companies listed on the NSE, Kenya. The study was guided by the following specific objectives: Establish the effect of dividend payout rate on financial performance, determine the effect of dividend per share on financial performance, examine the effect of dividend yield on financial performance and determine the moderating effect of company size on financial performance of selected companies listed on Nairobi Securities Exchange. The study used longitudinal research design targeting 57 companies listed on NSE as at 31st December 2020. Purposive sampling technique was used on the target population, whereby 18 least performing companies as at 31st December 2020 were selected. A total of 90 observations were included in the dataset. Secondary data was collected mainly from NSE Handbook 2020-2021 and annual reports of the companies over five years from 2016 to 2020. The analysis involved both descriptive and inferential statistics. An empirical estimation was then carried out involving testing for stationarity of the variables, cointegration and estimating the cointegrating relation. It was expected that the output of this study provided a basis for Board of Directors and managers of companies in Kenya, Investors, Government agencies and regulatory bodies to make an informed decision and develop policies for investments. The study came with findings, made conclusions and appropriate recommendations. Based on the findings, the study concluded that dividend payout rate led to an increase in ROA of selected companies listed on Nairobi’s Securities Exchange. Therefore, dividend payout rate had a positive and significant effect on financial performance of selected companies listed on Nairobi’s Securities Exchange. When companies enhance dividend payout, there is a likelihood of improved financial performance of selected companies listed on NSE, Kenya. The study recommended that companies listed at NSE should ensure that the dividend payout rate is aligned with the company’s long-term strategic objectives. For instance, a mature, stable company may prioritize regular dividends to reward shareholders, while a growth-oriented company may reinvest profits for expansion. Furthermore, the study recommends that the government should support companies by ensuring that there are sound decision practices on dividend payout policy for the sustainability of companies. This study should be used by academicians to understand how well management allocates profits between reinvestment and shareholders returns. Dividend payout rate can be used to tell a company’s financial health and examine key financial metrices. Suggestions for further studies to be carried out in the entire East Africa Region to assess the establishment of companies in Kenya, Uganda, Tanzania, Burundi, and Rwanda, and then compare the results of those listed companies in the region. Also, more studies should be carried out in the future to investigate the effect that dividend policy contain on the expansion of the economy.

기업수명주기에 따른 배당정책이기업가치에 미치는 영향

This paper examines the effect of high dividend payout policy on firm value according to the corporate life cycle. For the empirical analysis, we conduct the effect of the interaction term between the corporate life cycle and the dividend payout rate measured by cash flow patterns, on Tobin's Q measured by firm value.
 According to the life cycle effect of DeAngelo et al. (2006), we expect that the high dividend payout of the maturity stage will have a more positive effect on firm value than the dividend payout of companies in other life cycles. As a result of the analysis, we confirm that the high dividend payout in the maturity stage is positively associated with firm value compared to the other corporate life cycles. In the analysis, which includes dummy variables in other corporate life cycles except for the maturity stage, the dividend payout in the introduction stage and the decline stage has a lower positive effect on firm value than the dividend payout in other corporate life cycles. On the other hand, we find that the dividend payout in the growth stage has a higher positive effect on firm value than the dividend payout in other corporate life cycles.
 As an additional analysis, we divide by market and find that the dividend payout at the maturity stage is positively associated with firm value compared to the other corporate life cycles in all markets. And the dividend payout at the introduction stage and decline stage is negatively associated with firm value. In addition, as a result of analyzing the dividend payout by dividing it by various measurement methods(dividend to sales, net income, equity), we find that the dividend payout of the maturity stage is positively associated with firm value compared to the other corporate life cycles.
 This results imply that there is a difference in the value relevance of the dividend payout policy according to the corporate life cycle. Through this, we expect that information of the dividend payout policy effects can work differently according to the corporate life cycle.

Evaluation Factors That Determine the Dividend Payout Ratio of Commercial Banks in Nigeria

The study examined the evaluation of factors that determine the dividend payout rate of commercial banks in Nigeria. The research adopted ex post facto research covering the period 2009 to 2018. Secondary data were extracted from annual reports and accounts of selected banks listed on the Stock Exchange (NSE). The data were analyzed using multiple regression techniques. Findings depict that earnings per share have a positive and nonsignificant effect on the dividend payout ratio of commercial banks in Nigeria. Retained earnings on the other hand have a negative and significant effect on the dividend payout ratio of commercial banks in Nigeria. Net profit margin and debt-equity ratio have a negative and insignificant effect on the dividend payout ratio of commercial banks in Nigeria. However, bank age has a positive and significant effect on the dividend payout ratio of commercial banks in Nigeria. The adjusted R-squared revealed that 21% of the variations in dividend payout ratio could be explained by the explanatory variables while 79% could be explained by other factors that are capable of influencing dividend payout ratio that was not studied. The implication of the findings is that only retained earnings and bank age can be used in predicting movement in the dividend payout ratio of banks in Nigeria.

Does Corporate Governance Affect Dividends? Case Study in Indonesia Stock Exchange and Malaysia Stock Exchange


 Abstract – This study aims to analyze the effect of good corporate governance such as the number of commissioners, the number of commissioner meetings, the number of female commissioners, the independent commissioners on the dividend payout ratio in manufacturing companies listed on the Indonesia Stock Exchange and the Malaysia Stock Exchange. Malaysia was chosen because has a dividend payout rate close to Indonesia. This research uses a quantitative approach using multiple linear regression methods. The research used objects of 435 observations on the Indonesia Stock Exchange and 530 observations on the Malaysia Stock Exchange. The independent variables used are independent commissioners, board of commissioners meetings, size of commissioners, female commissioners. The results of the study using observations on the Indonesia Stock Exchange found that independent commissioners have a significant positive effect while the rest have an insignificant effect on the dividend payout ratio. Meanwhile, the results of the study using observations on the Bursa Malaysia found that the size of the commissioners and board of commissioners' meetings had a significant negative effect on the dividend payout ratio. Meanwhile, independent commissioners and female commissioners have a significant positive effect on the dividend payout ratio.

Optimal control of investment, premium and deductible for a non-life insurance company

A risk-averse insurance company controls its reserve, modeled as a perturbed Cramér-Lundberg process, by choice of both the premium p and the deductible K offered to potential customers. The surplus is allocated to financial investment in a riskless and a basket of risky assets potentially correlating with the insurance risks and thus serving as a partial hedge against these. Assuming customers differ in riskiness, increasing p or K reduces the number of customers n(p,K) and increases the arrival rate of claims per customer λ(p,K) through adverse selection, with a combined negative effect on the aggregate arrival rate n(p,K)λ(p,K). We derive the optimal premium rate, deductible, investment strategy, and dividend payout rate (consumption by the owner-manager) maximizing expected discounted lifetime utility of intermediate consumption under the assumption of constant absolute risk aversion. Closed-form solutions are provided under specific assumptions on the distributions of size and frequency of claims.

A perturbation approach to optimal investment, liability ratio, and dividend strategies

We study an optimal dividend problem for an insurer who simultaneously controls investment weights in a financial market, liability ratio in the insurance business, and dividend payout rate. The insurer seeks an optimal strategy to maximize her expected utility of dividend payments over an infinite horizon. By applying a perturbation approach, we obtain the optimal strategy and the value function in closed form for log and power utility. We conduct an economic analysis to investigate the impact of various model parameters and risk aversion on the insurer's optimal strategy.

The Influence of Cash Position, Debt to Asset Ratio and Firm Size on Dividend Payout Ratio in Property and Real Estate Companies Listed on The Indonesia Stock Exchange for the 2014-2018 Period

The purpose of this study is to determine and test the effect of Cash Position, Debt to Asset Ratio and firmsize on the Dividend Payout Ratio in Property and Real Estate companies listed on the Indonesia Stock Exchange for the period 2014-2018. This research is a quantitative research and the deductive approach is descriptive. The total population is 52 property & real estate companies on the IDX for the period 2014-2018. The sample technique uses purposive sampling so that the research sample that meets the criteria is as many as 13 companies. The data collection method used secondary data from financial reports, while the data analysis model was multiple regression. The results of the F test, namely Cash Position, Debt to Asset Ratio and Firm Size have an effect on the Dividend Payout Ratio. As individuals, Cash Position has a positive effect on the Dividend Payout Ratio, DAR has no effect on the Dividend Payout Ratio and Firm Size has a negative effect on the Dividend Payout Ratio. The value of determination coefficient as seen from Adjusted R2 is 0.435, which shows that the Dividend Payout Rate can be influenced by Cash Position, Debt to Asset Ratio and Firm Size of 43.5%, and 56.5% are other factors that are not shown in this research report.

Tolak Ukur Kebijakan Pembagian Dividen pada Perusahaan Go-Public

Dividends are profit rights granted to shareholders sourced from the ability of the issuer to make a net profit from operating activities. Dividends are usually distributed at the end of the accounting year which is decided from the results of the GMS (General Meeting of Shareholders). The ratio of the dividend payout rate is called the DPR (dividend payout ratio). This ratio shows the percentage of profits paid by companies in the form of dividends with the total profit available to shareholders. The purpose of this research is to find out and analyze the company's benchmarks in determining dividend distribution policy on companies going public. There are several ratios that can influence companies in determining dividend distribution policies. The ratio is the ratio of profitability which is proxied by the value of ROA, leverage is proxied by the value of Current Ratio and the value of the company which is proxied by the value of PER (Price Earning Ratio). This research is a type of quantitative research using secondary data that is the financial statements of go-public companies in banking companies in 2015-2017. Targeted outputs are international journals, proceedings in local scientific meetings and IPR. TKT is at level 2: the basic assumptions and laws that will be used in technology reaches 80%, the study of literature on the basic principles of technology reaches 80% and the formulation of research hypotheses reaches 80%.

Discrete optimal capital investment and financing policies in fishery resource harvesting with reserve area

This research discusses a problem in renewable resource (fish) harvesting on single-owner fishery where the dynamics of growth are expressed by system of difference equations. The model involves three state variables (stock of equity, resource stock in reserve zone and unreserved zone) and two control variables (effort rate and dividend payout rate). Discrete Pontryagin maximum principle was applied to obtain optimality conditions which must be satisfied by the variables. Further, the forward-backward sweep method was used to determine the numerical solution of optimal control model. Three scenarios of interest rate applied to find out the response of company in managing harvesting effort and dividend payout rate were investigated.

Micro Determinants of Dividend Policy in Quoted Manufacturing Companies in Nigeria

This study examined the factors that determine dividend policy of quoted manufacturing firms in Nigeria. The general purpose is to examine factors that affect dividend policy of the quoted firms. After exhaustive literature review, cross sectional data was sourced from financial statement of twenty quoted manufacturing firms. Dividend payout rate was proxy for dividend policy while growth opportunities, liquidity, management efficiency, profit level, cost of capital, company size and debt equity ratio were proxy for independent variables. The study applied the Pooled Ordinary Least Square (OLS), fixed effect, and random effect regression models using the e-view statistical package. Findings reveal that growth opportunities, profit level, management efficiency and debt equity ratio have negative effect on dividend payout ratio while liquidity, cost of capital and company size have positive effect on dividend payout ratio of the manufacturing firms. We conclude that liquidity cost of capital and company size significantly determine dividend policy while growth opportunities, management efficiency, profit level and debt equity ratio have no significant effect on dividend policy. The study recommends among others, that managers/consultants should carefully examine the economic factors within a firm’s operating environment when carrying out the functions of developing or designing dividend policy for the firm.

Macroeconomic Variables and Retained Earnings of Quoted Manufacturing Firms in Nigeria: A Time Variant Study

This study examined external factors that determine retained earnings of quoted manufacturing firms in Nigeria. Annual time series data were sourced from Central Bank of Nigerian Statistical Bulletin, and Annual Reports of the selected manufacturing firms, the study modeled retained earnings the function of money supply, exchange rate, oil price, inflation rate and interest rate. The ordinary Least Square method was employed with multiple regression model based on Statistical Package for Social Sciences version (22.0). The Durbin-Watson statistics show the presence of multiple serial autocorrelation.The result shows collinearity that corresponds with the Eigen value condition index and variance constants are less than the required number, while the variance inflation factors indicate the absence of auto-correlation.It was found that Oil price have positive impact on retention rate of the selected manufacturing firms while exchange rate and interest rate have negative impact on the dependent variable. It was also found that money supply have negative effect on dividend payout rate while inflation rate have positive impact on retention rate. From the findings we conclude that oil price, interest rate, exchange rate and money supply have no significant relationship with dividend policy while inflation rate have significant relationship with dividend policy of the selected quoted manufacturing firms. We recommend the need for the manufacturing firms to formulate policies that leverage the negative effect of macroeconomic variables on retained earnings of the manufacturing firms and interest rate should properly be defined in the Nigerian financial market that is either full deregulated or regulated to determine the market rate of return, investment and the profitability of manufacturing firms. The operational efficiency of Nigerian capital market and the financial environment should be deepened, existing laws that does not encourage profitable investment should be changed and new laws enacted to enhance investment that will affect the profitability of manufacturing firms positively.

Practical Applications of Reinvestment and Global Stock Returns

Practical Applications Summary In Reinvestment and Global Stock Returns, from the Summer 2018 issue of The Journal of Investing, Haim A. Mozes studies an apparent contradiction between economic theory and observed reality. In theory, companies should retain their earnings for as long as the rate of return on their investments is greater than their cost of capital, and if their return on investment drops below their cost of capital, they should return capital to their investors. This suggests that dividend increases, which hand more capital back to investors, should be considered bad news, because they signal expected lower returns. But the reality is different-stock markets have a well-documented tendency to view dividend increases as good news, with stock prices rising in response. Mozes (a professor of finance at Fordham University’s Gabelli School of Business in New York) studies the relationship between dividend rate increases and stock market returns at the level of countries rather than individual companies, comparing the experience of 20 national stock markets during the period 2000 to 2016. He finds that the conventional theory does in fact hold at this level of analysis: When dividend payout rates increase in aggregate for an entire country’s market, stock market returns subsequently decline. This has valuable practical implications for investors considering global investing portfolios.

Reinvestment and Global Stock Returns

This article examines the relationship between a country’s aggregate dividends and its equity market returns. In many countries, the change in the aggregate dividend payout rate is negatively correlated with returns, and in some countries there is no significant relationship between dividend payout rate changes and equity market returns. However, there are no countries in which the change in the dividend payout rate is significantly positively related to returns and the cross-country relationship between dividend payout rate changes and returns is significantly negative. The implication is that at the country level, dividend payout rate increases represent a decrease in the country’s investment opportunity set and are accordingly interpreted by investors as bad news, as evidenced by the finding that the change in a country’s dividend payout rate is negatively related to changes in analysts’ expectations of long-term earnings growth for that country. Furthermore, dividend payout rate increases lead investors to pay less per unit of future expected earnings, as evidenced by the result that the change in a country’s dividend payout rate is positively correlated with the change in the country’s equity risk premium. A country’s long-term equity market performance is also related to its dividend payout policy. Specifically, over different holding periods, countries with lower dividend payout rates have higher real long-term returns than countries with higher dividend payout rates, even after allowing for the reinvestment of dividends (either into equity or into TIPS).

Signaling Effect of Shifts in Dividend Policy: Evidence from Indian Capital Markets

Empirical evidence suggests that a large number of studies support the signaling impact of dividends, but the results are more pronounced in developed markets as compared to emerging markets, where because of the weak form of market efficiency, signaling impact is not well-established. This study tests this hypothesis in Indian capital markets, in terms of signaling impact due to shifts in dividend policy. The study has defined the shift in dividend policy as an increase or a decrease of dividend by 20 percent from the previous dividend payout rate. Standard event study methodology was applied on 129 such events in the selected time period and these events were further classified according to market capitalization. Large-cap stocks displayed the presence of significant abnormal returns in the pre-event period, whereas the mid-cap stocks displayed the same in the post-event period. The results of the small-cap stocks mirrored that of large-cap stocks but they are the only ones in which cumulative average abnormal returns were found to be significantly displaying the lagged response toward the event. The decrease in dividend rate by 20 percent or more did not result in average abnormal returns in either pre-event or post-event window.

TAX AVOIDANCE, RELATED PARTY TRANSACTIONS, CORPORATE GOVERNANCE AND THE CORPORATE CASH DIVIDEND POLICY

This study aims to investigate the relationship between tax avoidance, related party transactions and the corporate dividend policy. Furthermore, this study will also investigate the moderating effects of the implementation of Corporate Governance (CG) on the relationship between tax avoidance, Related Party Transactions (RPT) and corporate dividend policies. Our sample covers companies listed on the Indonesian Stock Exchange during 2011-2014. The results provide moderate support for the proposed hypotheses. First, the greater tax avoidance that a company makes will increase the size of the firm's RPT. Second, the higher that the company's RPT is, this will lower the company's cash dividend payout rate. Third, the greater the tax avoidance is, the lower the company's cash dividend payout rate will be, which is done through a related party transaction.Fourth, the impact of the implementation of strong CG will weaken the positive relationship between corporate tax avoidance and the company’s RPT size, strengthen the negative relationship between the RPT’s size and the cash dividend payout policy of the firm, and strengthen the negative relationship between the company’s tax avoidance and the company's cash dividend payout policy which is mediated by the company’s RPT. This study makes three contributions. First, this study shows an indirect relationship between tax avoidance and cash dividend payments, mediated by RPT. Second, this study tries to examine the effect of CG’s moderation on the relationship between tax avoidance and RPT, as well as the effect of CG’s moderation on the relationship between tax avoidance and cash dividend payments, mediated by RPT. Third, this study developed RPT measurements by looking at the RPT’s components more specifically (looking at components of transactions outside of the main business of the company - the "others" component).

Mutual Funds’ Holdings and Listed Firms’ Dividend Payouts: Evidence from China

This paper investigates the relationship between listed firms’ dividend policies and mutual funds’ investment decisions in China. We find that all types of mutual funds prefer to invest in companies that distribute earnings by way of dividends. Robustness checks show that mutual funds prefer cash dividends to stock dividends, but they are not particularly attracted to firms that pay high cash or high stock dividends. We further show that all types of mutual funds can positively influence listed firms’ cash dividend pay-out rates, but only transient (short-term) funds influence stock dividend increases of listed firms.

Investigation of the Relationship between Ownership– Control Discrepancy and Dividend Policy in Tehran Stock Exchange

Present research examines the relation between the ownership-control discrepancy the major shareholder and dividend policy in Tehran Stock Exchange. This research focuses on the effect of the conflicts of interests between majority shareholders and minority shareholders on firms’ dividend policy, because dividend policy can serve as a replacement for this the conflicts of interests. In this research, Investigation all firms in Tehran Stock Exchange that serves the annual reports for the years 2007 through 2010. In a total the selection 134 firms of different industries. The test of the proposed hypotheses conducted on a panel data. In a total research results show that the influence of the ownership to control ratio of the largest shareholder (OWCONT) on dividend payout rate is significantly positive. Indeed, the more this ratio is high, the more the control is low and payout is high. In contrast, if the largest shareholder has a controlling power that exceeds his/her cash flow right, payout is low. Furthermore, control power is significantly related to the dividend policy.

Optimal Dividend and Capital Injection Strategies for a Risk Model under Force of Interest

As a generalization of the classical Cramér-Lundberg risk model, we consider a risk model including a constant force of interest in the present paper. Most optimal dividend strategies which only consider the processes modeling the surplus of a risk business are absorbed at 0. However, in many cases, negative surplus does not necessarily mean that the business has to stop. Therefore, we assume that negative surplus is not allowed and the beneficiary of the dividends is required to inject capital into the insurance company to ensure that its risk process stays nonnegative. For this risk model, we show that the optimal dividend strategy which maximizes the discounted dividend payments minus the penalized discounted capital injections is a threshold strategy for the case of the dividend payout rate which is bounded by some positive constant and the optimal injection strategy is to inject capitals immediately to make the company's assets back to zero when the surplus of the company becomes negative.

The impact of government ownership on dividend policy in China

We investigate the impact of State ownership on Chinese corporate dividend policy. We find that Chinese firms' dividend payout rates respond fairly quickly to earnings changes, and the average actual payout ratio for Chinese firms falls between the payout ratios for emerging-market and developed firms. These results are consistent with the dividend policies of developing economies in general. We also find that dividend payouts among dividend-paying firms, and the likelihood that a firm will pay a dividend, are increasing in State ownership. Our findings are consistent with the State's need for cash flow as a partial motivation for continued State ownership of a significant portion of the corporate economy, and support the agency and tax clientele explanations for dividend policy.