Dividend Payout Research Articles

Litigation Risk, Ownership Structure and Payout Policy: An Agency Theory Perspective

The study aims to investigate the relationship between litigation risk, ownership structure and payout policy in the light of agency theory. The study analyzed a data set of 690 non-financial Chinese firms spanning 2013–2021, by employing two-stage dynamic panel data methodology. The results reveal that litigation risk adversely impacts dividend payouts, while managerial ownership has a similar negative effect. Conversely, institutional and concentrated ownership exhibit positive associations with dividend yield. Furthermore, managerial and institutional ownership moderates the link between litigation risk and dividend payout ratio, while concentrated ownership strengthens this link. These findings confirm the presence of agency theory dynamics in emerging economies, providing valuable insights for corporate decision-makers, regulators and investors. By considering the moderating role of ownership structure, this research enhances our understanding of the multifaceted relationship between litigation risk and payout policy, facilitating better-informed strategic decisions and policy formulation. The study provides valuable implications for corporate managers and individual investors for constructing a diversified portfolio in the context of emerging economies.

PENGARUH INSTITUTIONAL OWNERSHIP, SALES GROWTH, DAN RASIO KEUANGAN LAINNYA TERHADAP NILAI PERUSAHAAN

The purpose of this research is to show empirically the factors that influence firm value. This research wants to test whether variables such as institutional ownership, sales growth, capital structure, return on assets, debt to asset ratio, current ratio, and dividend payout ratio have an influence on firm value. The sampling method used in this research was a purposive sampling technique with total data obtained from 2020-2022, namely 124 sample companies from the consumer cylicals, consumer non-cylicals and healthcare sectors that met the research criteria. The analysis technique applied is the multiple regression method. This research shows that sales growth and return on assets influence firm value, while institutional ownership, capital structure, debt to asset ratio, current ratio, and dividend payout ratio do not influence firm value.

Pengaruh Kebijakan Dividen Terhadap Kinerja Keuangan pada PT. Gudang Garam TB

Multinational companies in Indonesia, such as PT Gudang Garam Tbk, with complex financial statements, are interesting subjects for study. The company's capital ownership has increased annually, but this growth has not been accompanied by an increase in profits. The analysis is based on the financial statements of PT Gudang Garam Tbk for the period 2018-2022, using simple regression analysis. In this analysis, the dividend payout ratio, Return On Investment, and Return On Equity are considered as independent variables (x), while financial performance is the dependent variable (y). The study results show an increase in the dividend policy, but a decrease in ROI and ROE. Furthermore, the statistical analysis reveals that the dividend policy has a positive effect on financial performance, while ROI and ROE have a negative impact on financial performance. The findings indicate that the low profit growth is not due to high or low capital, but is instead caused by the return on investment (ROI) and return on capital (ROE) in the form of profit sharing. Hence, it is the return process that leads to declining or low profits.

Pre-IPO dividend puzzle: Reaction to IPO underpricing or post-IPO lockup? Evidence from China

It remains a puzzle as to why firms pay cash dividends to initial investors prior to their initial public offerings (IPOs) while at the same time raising capital through the IPOs. Leveraging mandatory disclosure from three years of pre-IPO data in China, we examine two possible explanations for this puzzle: strategic reactions to IPO underpricing and post-IPO lockup. Our findings suggest that (1) when an IPO firm expects a large IPO underpricing, it pays more cash dividends pre-IPO, suggesting that initial shareholders view large IPO underpricing as undervaluing the market value of the firm's cash pre-IPO. (2) When an IPO firm pays more cash dividends pre-IPO, its initial shareholders unload fewer shares post-IPO after lockup expiration, suggesting that the initial shareholders receive “compensation” via cash dividends to ease their liquidity concern from post-IPO lockup. Both results support the proposed explanations. Additional analyses show that high cash dividend payouts pre-IPO are associated with fewer fixed assets, less investment in research and development, and poor performance post-IPO. These results indicate that cash dividends pre-IPO are not consistent with shareholder value maximization. Overall, pre-IPO cash dividends reflect a type II agency conflict in which initial shareholders seek private benefits at the expense of future shareholders.

Mandating a dividend distribution policy disclosure over fixed dividend policy: a shareholder value perspective

ABSTRACT Shareholders may never be able to perfectly assess the optimal dividends paid by the firm. While fixing a certain dividend percentage by regulators, is one way to ensure shareholders’ dividend rights, mandating a dividend distribution policy (DDP) could be a unique alternative. This study examines the stock market reaction to a regulation that mandated a set of Indian firms to disclose their DDP. Using an event study coupled with Regression discontinuity design, we find that shareholders appreciate the value of the firms affected by the regulation by 1.15% on average, which is roughly 2–2.5% higher than firms unaffected by the regulation. This suggests that mandating information disclosure on dividend payouts can alleviate issues related to shareholders’ right for dividends without affecting firms’ investment decisions. Also, retained earnings play a price-differentiating role in dividend-paying and non-dividend paying firms.

Financial Performance's Impact on Firm Value: How Managerial Ownership Mediates the Relationship

Banks play a significant role in facilitating the generation of economic growth opportunities, which can impact the achievement of government-set economic growth objectives. Hence, it is imperative to foster a climate that promotes banks' competitive growth and resilience, enabling them to effectively confront many problems in the face of escalating global complexities. To maintain a competitive edge, the bank must exhibit strong performance that positively influences corporate value. For that, the objective of this study is to ascertain the key determinants that exert a substantial impact on the valuation of firms, specifically examining the potential influence of capital structure, profitability, profits per share, and dividend payout ratio on the value of financial institutions. Another aim of the study is to ascertain the potential moderating effect of managerial ownership on the independent variable of company value. The sample selection included purposive random sampling, with the criterion of including only those with complete data from the research period spanning 2011 to 2022, using Moderation Regression and data panel Analysis. This study shows that earnings per share and dividend payout ratio significantly impact banks' valuation. In the interim, the Moderation Regression Analysis has yielded findings indicating that management ownership is a moderating factor in the relationship between earnings per share and banking value.

Subordinate executives’ horizon and cash holdings

This study investigates whether internal governance stemming from subordinate executives' employment horizons affects corporate cash holdings. Consistent with the idea that key subordinate executives provide checks and balances within a firm and affect corporate decisions, we find cash holdings increase with subordinate executives' horizon, supporting the precautionary motive for the former. Controlling for alternative explanations, the positive association between internal governance and cash holdings is hardly affected by the agency motive, tournament incentives between CEO and subordinate executives or confidence level of executives. Our findings are also robust to alternative measures of subordinate executives' horizon and cash holdings and are not driven by endogeneity issues. The analysis of cash sources documents that firms with longer subordinate executives’ horizon save a higher proportion of cash proceed through reduced dividend payouts and equity issuance, rather than debt. This study contributes to the literature by shedding light on how diverse agents with different employment horizons in the top management team influences the liquidity policy of the firm.

Competition for ‘Top 25 Companies’ Award’s Criterion of PSX: An Evaluation of the Financial Aspects

A company's performance is a complex phenomenon because of a variety of aspects to quantify it, however, a competitive criterion has been established by Pakistan Stock Exchange (PSX) in terms of "Top 25 Companies". Those firms qualifying this criterion over the last two decades need to be compared with those who have yet to achieve it. The main objective of the study is to evaluate the financial stability and extra-ordinary performance based on PSX quantitative criteria of those firms maintaining top 25 position over last 24 years. The financial aspects of 18 firms out of more than40 has been selected by taking last 24 years' data. These firms are classified into two different samples, the sample from companies successfully qualify the criterion for "Top 25 Companies" award, while the second sample consist of other renowned ones that yet to qualify for this criterion. The performance evaluation of both types of firms has been done through financial statements available on the website of PSX through their annual reports to calculate the ratios. In addition to these financial ratios other relevant indicators considered for evaluation purposes are, equity premium as a difference in returns between stocks and less risky instruments (bonds), firm size measured through sales, and market performance measured through total assets. The impact of these ratios on the stock returns has also been evaluated through regression analyses which allowed to identify those specific advantages the ‘top-25 qualifier’ firms may have over the ‘other non- qualifier’ firms. The findings suggest that ‘top 25 qualifier’ firms mainly beat the ‘others non- qualifier’ based on equity-related measures including dividend payout ratios, market premium and the equity premium. Therefore ‘other non-qualifier’ should improve equity-related context to successfully qualify for this criterion in future.

Pengaruh Return on Equity dan Current Ratio terhadap Dividend Payout Ratio pada Perusahaan Manufaktur Sektor Basic Materials Terdaftar di BEI Periode 2018-2023

This study aims to explore the impact of financial factors, such as Return On Equity, Current Ratio on Dividend Payout ratio in manufacturing companies in the basic Materials sector listed on the IDX from 2018 to 2023. This study uses a quantitative method. The population and sample in this study are the annual financial statements of manufacturing companies in the basic materials sector in 2018-2023. The sample in this study consists of 54 financial statements taken using a purposive sampling technique. The data analysis used in this study is multiple linear regression analysis using the help of the SPSS 22 application. The results of the study show that partially the Return On Equity (ROE) variable has a significant effect on the Dividend Payout Ratio (DPR). Meanwhile, the Current Ratio (CR) variable has no effect on the Dividend Payout Ratio (DPR). Meanwhile, the Current Ratio (CR) variable has no effect on the Dividend Payout Ratio (DPR). Simultaneously, the Return On Equity (ROE) and Current Ratio (CR) variables affect the Dividend Payout Ratio (DPR) with a determination coefficient value of 21.6%.

Elucidation of Dividend Payout Determinants on Manufacturing Companies: A Systematic Review

Controversy issues in dividend policy have not been solved so far in modern corporate finance. Dividend payout is a puzzle in the contemporary financing system, as it was a traditional puzzle. Besides, conflict of interest between shareholders and managers of the corporation leads to a dramatic approach in the recent business environment. The main objective of this review was to identify and elucidate dividend payout determinants in manufacturing companies. Manufacturing is an industry that often uses manual labour or machinery to create goods from raw materials. Manufacturing industries include metal, automotive, electronics, textile, chemical, food and beverage, and so on sectors. This review carried out from 2004 to 2022 published studies in indexed journals. The review has assessed 62 journals with different databases through a vigilant review process concretely. The journals have been selected and systematically elucidated as relevant to the subject matter. The review depicts that dividend payout determinants differ from company to company. This shows that the dividend issue is still a puzzle in contemporary corporate finance.

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.

Resilience and Adaptation: Investment Metrics of Indonesian Healthcare Companies Before and During the COVID-19 Pandemic

The impact of dividend policy and stock valuation (price earning proportion and price to book value) on the prices of healthcare industry stocks listed on the Indonesia Stock Trade somewhere in the range of 2016 and 2021 is examined in this study. The research data used in this quantitative analysis are secondary data. This study included eighteen healthcare sector companies in its sample. Purposive sampling is the methodology used in this study, and SPSS 24 is the analysis tool. We explained the relationship between stock prices, dividend policy, and stock valuation. We order the variables into pre-pandemic and during-pandemic categories subsequent to testing them for like clockwork. That's what the experimental results demonstrate, for all periods, the earning-per-share notation has a significant impact on stock prices. Stock valuation, on the other hand, has a significant impact on stock prices, as does the final dividend policy with dividend payout proportion and dividend per share. Meanwhile, results from the pre-pandemic time frame indicate that EPS and DPR didn't significantly influence results; results from the pandemic time frame indicate that stock valuation didn't significantly influence stock price. This research provides fresh insights into what the recovery of economic exposure means for corporate conduct in Indonesia, where persistent financial and economic pressures from stock market unpredictability give substantial sources of uncertainty.

Pengaruh Struktur Aktiva, Debt to Assets Ratio, Return on Equity Ratio dan Dividend Payout Ratio Terhadap Price Book Value

This research examines the impact of Asset Structure, Debt to Assets Ratio, Return on Equity, and Dividend Payout Ratio on Price to Book Value. It focuses on non-banking firms listed in the LQ45 Index on the Indonesia Stock Exchange from 2019 to 2023. Utilizing secondary data and purposive sampling, the study analyzed a sample of 16 non-banking companies out of a population of 38. Multiple linear regression analysis was conducted using SPSS version 22. The results show that Debt to Assets Ratio, Return on Equity, and Dividend Payout Ratio affect Price to Book Value, while Asset Structure does not. Asset Structure does not..

Pengaruh Current Ratio, Return On Asset, Total Asset Turn Over dan Net Profit Margin terhadap Dividend Payout Ratio

This study aims to examine the influence of the Current Ratio, Return on Assets, Total Asset Turnover, and Net Profit Margin on the Dividend Payout Ratio (A Study of Food and Beverage Sector Manufacturing Companies Listed on the Indonesia Stock Exchange for the Period 2019 – 2023). The research is conducted using secondary data from financial reports. The sampling technique used is purposive sampling. Data analysis is performed using classical assumption tests, multiple linear regression, F-tests, and t-tests. Out of 44 companies, only 20 consistently released their financial statements annually. For data analysis purposes in this study, the researcher uses statistical testing with SPSS 27. The results show that the Current Ratio, Total Asset Turnover, and Net Profit Margin do not affect the Dividend Payout Ratio, whereas the Return on Assets has a significant influence on the Dividend Payout Rasio.

Capital Structure and Dividend Payout of Quoted Agriculture Firms in Nigeria: Moderating Effect of Financial Performance

Despite the previous effort to analyze the capital structure and dividend payout interface with mixed results, it appears the moderating effect of financial performance on the nexus was yet to be empirically examined. This study examined the moderating effect of financial performance on the relationship between the capital structure and dividend payout ratio of quoted agriculture firms in Nigeria. Debt-equity ratio and debt-assets ratio were the proxies of capital structure, while dividend payout ratio measured dividend payout. Return on asset was the proxy for financial performance. Adopting an ex-post facto research design, the panel data sourced from the annual published accounts of the firms were subjected to multiple regression analysis using STATA 13. The results showed that the debt-equity ratio has a negative and significant effect on the dividend payout ratio of quoted agriculture firms in Nigeria. The debt-assets ratio has a positive and insignificant effect on the dividend payout ratio of agriculture firms in Nigeria. Return on assets has a positive and significant effect on the dividend payout ratio of quoted agriculture firms in Nigeria. Furthermore, return on assets has a negative and significant moderating effect on the relationship between debt-equity ratio and dividend payout ratio, while return on assets also has a negative and insignificant moderating effect on the relationship between debt-assets ratio and dividend payout ratio of quoted agriculture firms in Nigeria. The firms should use debt-financed assets more productively to generate an optimum return on assets to reverse the negative effect of the debt-equity ratio on the dividend payout ratio if they are to consistently pay competitive dividends and attract investment.

The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

Non-financial companies listed on the Frankfurt Stock Exchange face considerable difficulties due to expensive funding and the need to make complex decisions about their capital structure. These problems impact their judgments about dividend policy, resulting in ambiguity and possible inefficiency. This study draws on the bird-in-hand theory to investigate the influence of the cost of capital on dividend policy decisions among non-financial firms listed on the Frankfurt Stock Exchange, focusing on 227 companies from 2005 to 2022. The data for this study were sourced from Thomson Reuters Datastream. Employing the common shock autoregressive distributed lag (CS-ARDL) and two-step generalized method of moments (GMM) estimations, findings reveal that the cost of debt consistently negatively impacts dividend payouts and coverage ratios. In contrast, the cost of equity has an insignificant effect. Conversely, the weighted average cost of capital positively influences dividend payouts and coverage ratios but negatively influences dividend yield. All the findings supported the bird-in-hand theory except for the negative impact of WACC on dividend yield. These insights highlight the importance of considering the cost of capital and market share dynamics in dividend policy formulation. Firms should prioritize efficient debt management to sustain dividend distributions, and aligning dividend policies with overall capital structure management is crucial in this regard, providing a sense of reassurance and confidence to the firms and their stakeholders. This study provides valuable guidance for financial decision-makers navigating dividend-related strategies within corporate environments.

Effect of Corporate Governance on Dividend Policy of Nepalese Insurance Companies

This study investigates the effect of corporate governance on dividend policy of Nepalese insurance companies. Dividend payout ratio and dividend per share are the dependent variables. Similarly, board size, female directors, number of independent directors, operating expenses and total asset are selected as independent variables. The study is based on secondary data of 15 Nepalese insurance companies with 102 observations for the period from 2013/14 to 2021/22. The data were collected from the annual reports of respective insurance companies. The correlation coefficients and regression models are estimated to test the significant and importance of different corporate governance variables on the dividend policy of Nepalese insurance companies. This study shows that the board size has a positive impact on dividend payout ratio and dividend per share. It indicates that increase in the number of board members leads to increase in dividend payout ratio and dividend per share in Nepalese insurance companies. Likewise, female director has a positive impact on dividend payout ratio and dividend per share. This implies that higher the number of female directors in the board of a company, higher would be the dividend payout ratio and dividend per share. Similarly, the number of independent directors has a positive impact on dividend payout ratio and dividend per share. It means that the increase in number of independent directors leads to increase in dividend payout ratio and dividend per share. Moreover, operating expenses has a positive impact on dividend payout ratio and dividend per share. This indicates that higher the operating expense ratio, higher would be the dividend payout ratio and dividend per share. In addition, total assets have a positive impact on dividend payout ratio and dividend per share. It indicates that increase in the total assets leads to increase in dividend payout ratio and dividend per share in Nepalese insurance companies.

Faktor-Faktor yang Berpengaruh terhadap Dividen Payout Ratio

This study aims to examine and analyze the factors that influence the dividend payout ratio in manufacturing companies in various industry sectors and the basic & chemical industry sector. The population of this research is 17 manufacturing companies in various industry sectors which are listed on the Indonesia Stock Exchange in the period of 2016-2018. With a total sample of 51 and this sampling technique uses a purposive sampling method. Testing the hypothesis of this study using multiple linear regression. The independent variables in this study are profitability (ROA), liquidity (CR), leverage (DER) and earnings per share (EPS). Whereas the dependent variable is the dividend payout ratio (DPR). The results of this study indicate that profitability (ROA), liquidity (CR) and earnings per share (EPS) affect the dividend payout ratio, laverage (DER) does not affect the dividend payout ratio.

Relationship Between Dividend Payout and Its Determinants: A Meta-Analysis

Relationship Between Dividend Payout and Its Determinants: A Meta-Analysis

PENGARUH RASIO KEUANGAN DAN FAKTOR LAINNYA TERHADAP NILAI PERUSAHAAN NON-KEUANGAN DI INDONESIA

The purpose of this research is to obtain empirical evidence about the effect of return on equity, debt to equity ratio, current ratio, firm size, dividend payout ratio, managerial ownership, institutional ownership, and free cash flow on firm value. This research uses samples from all companies except financial sector listed on the Indonesia Stock Exchange (IDX) from 2019 to 2022 with 65 listed non-financial companies used as samples in this research. This sample selection used the purposive sampling method with research data with a total of 195 data and analysis using multiple linear regression. The results of this research showed that return on equity and debt to equity ratio have positive effect on firm value. Higher return on equity shows that the company is generating higher profits and the profits can exceed the cost of equity, thereby giving a positive impression to shareholders which can increase firm value. Higher debt to equity ratio means that the company is more confident about the company’s prospects and increases the management discipline in managing company’s financial, which makes investors interested in buying shares, thereby increasing firm value. Other independent variables such as current ratio, firm size, dividend payout ratio, managerial ownership, and institutional ownership have no effect on firm value.