Dividend Policy Of Firms Research Articles

Common Ownership and Firm Dividend Policies

This paper examines the relationship between common ownership and firm dividend policy. Using a detailed dataset from Sweden on investors’ holdings, we find that dividend policies of firms newly added to an investor’s portfolio evolve towards the dividend policies of the existing firms in this portfolio. This relationship is neither driven by investors targeting firms forecasted to change their dividend policies, nor by firms with a similar dividend strategy to the companies in the new acquirer’s existing portfolio. Instead, the effect on dividends depends on the characteristics of the new owner and of the company purchased. Our results suggest that owners have a “dividend policy style”, that they are influential in dividend decisions, and that their influence depends on the type of co-owner and the existing governance characteristics of the co-purchased firm.

Pengaruh Likuiditas dan Struktur Modal terhadap Kebijakan Dividen dan Nilai Perusahaan

Firm value is an important indicator in assessing a company's performance. The size of a firm's value can affect investors in investing. Firm value can be affected by several factors such as liquidity, capital structure and dividend policy. The purpose of this study is to determine the significance of the influence of liquidity and capital structure to dividend policy and also to know the significance of the influence of liquidity, capital structure and dividend policy on firm value. This research was conducted at a manufacturing company listed in Indonesia Stock Exchange period 2013 - 2016. This study used by 21 companies by using purposive sampling method. This research uses path analysis technique (path analysis). Based on the analysis that has been done found that liquidity has a significant positive effect on dividend policy and firm value, while capital structure have a significant negative effect to dividend policy and firm value and dividend policy have positive significant effect to firm value.

Dividend policy of firms listed on Casablanca Stock Exchange: a panel data analysis

This study attempts to identify the main determinants of dividend policy and evaluate the theories that better explain the dividend behaviour of Moroccan listed firms. Data consists of all non-financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2015. This study employed panel data analysis to demonstrate that current profits, financial leverage, growth, liquidity, free cash flow, institutional stock holdings and economic conjuncture represent the main determinants of dividend policy of Moroccan listed firms. The results reveal that the level of expected earnings and past dividend patterns does not influence dividend policy. The findings offer analysts, investors and academicians a valuable tool to understand how CFOs, CEOs, and board of directors design dividend policy. Moreover, given the severity of agency problems in CSE and the role of dividend policy in reducing agency problems, understanding the factors influencing dividend policy is fundamental for investors trading in this market.

Dividend policy of firms listed on Casablanca Stock Exchange: a panel data analysis

This study attempts to identify the main determinants of dividend policy and evaluate the theories that better explain the dividend behaviour of Moroccan listed firms. Data consists of all non-financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2015. This study employed panel data analysis to demonstrate that current profits, financial leverage, growth, liquidity, free cash flow, institutional stock holdings and economic conjuncture represent the main determinants of dividend policy of Moroccan listed firms. The results reveal that the level of expected earnings and past dividend patterns does not influence dividend policy. The findings offer analysts, investors and academicians a valuable tool to understand how CFOs, CEOs, and board of directors design dividend policy. Moreover, given the severity of agency problems in CSE and the role of dividend policy in reducing agency problems, understanding the factors influencing dividend policy is fundamental for investors trading in this market.

The Cash Flow Sensitivity of Cash Dividends in Different Dividend Taxation Systems

This paper investigates the cash flow sensitivity of cash dividends in different cash dividend taxation systems. Using a cross-country study, we find that a firm's dividend policy in a single dividend taxation system (relative to a double dividend taxation system) is more sensitive to cash flow as measured by the propensity to initiate a cash dividend, propensity to pay a cash dividend, and in the size of the cash dividend. The cash flow sensitivity of cash dividends is asymmetric -- firms in single taxation systems more aggressively adjust dividend policy when confronted with negative rather than positive cash flows. Our findings are qualitatively identical before and after the 2003 dividend tax cut in the United States.

INTERNAL CAPITAL MARKETS, FORMS OF INTRAGROUP TRANSFERS, AND DIVIDEND POLICY: EVIDENCE FROM INDIAN CORPORATES

AbstractFirms in a business group share ownership structures, allowing them access to sources of intragroup financing not available to independent firms. Resources could be transferred within a group either through intragroup transactions, primarily operational activities (internal transfers), or through dividends permitting insiders to make investments in other group firms (external transfers). The first strategy predicts lower dividends, and the second predicts the reverse. Using a large data set of listed Indian firms, we look at the costs of internal transfers versus external transfers and find that dividend policies of group firms are better explained by the external transfer hypothesis.

MARKET FLUCTUATIONS EXPLAINED BY DIVIDENDS AND INVESTOR NETWORKS

The inability of investors and academics to consistently predict, and understand the behavior of financial markets has forced the search for alternative analytical frameworks. Analyzing financial markets as complex systems is a framework that has demonstrated great promises, with the use of agent-based models (ABMs) and the inclusion of network science playing an important role in increasing the relevance of the framework. Using an artificial stock market created via an ABM, this paper provides a significant insight into the mechanisms that drive the returns in financial markets, including periods of elevated prices and excess volatility. The paper demonstrates that the network topology that investors form and the dividend policy of firms significantly affect the behavior of the market. However, if investors have a bias to following their neighbors then the topology becomes redundant. By successfully addressing these issues this paper helps refine and shape a variety of additional research tasks for the use of ABMs in uncovering the dynamics of financial markets.

Intervening Effect of Cash Holdings in the Relationship Between Financial Performance and Dividend Policy

Many studies on relationship between financial performance and dividend policy have resulted to controversial outcome with few studies questioning the intervening effect of cash holdings. The purpose of this study was to evaluate the effect of cash holdings on the relationship between financial performance and dividend policy. The study applied positivism research philosophy and descriptive causal research design. The study was anchored on hypothetical view that the relationship between financial performance and dividend policy of firms listed at the Nairobi securities exchange is not intervened by cash holdings which was tested against a sample size of 31 firms listed at the Nairobi securities exchange selected using purposive sampling technique. The research findings were as follows: There was a significant direct association between operating cash flows and dividend policy which was intervened by cash holdings. In general it was concluded that the link between financial performance and dividend policy of firms listed at the Nairobi securities exchange was significant. The study outcome augment existing knowledge on financial performance and dividend policy for it is evident that firms with ability to generate income directly influence dividend payout ratio and therefore, top management should enhance financial performance and not dividend policy which is irrelevant. Cash holdings intervenes this relationship hence the level of cash balances maintained by the firm explain more on the reason why some firms pay more dividend on increase of profitability levels while others does not. Regulatory bodies such as Capital Market Authority and Centre for Corporate Governance use these research findings to improve their financial viability assessment approach of firms listed at the Nairobi securities exchange.

Financial Performance and Dividend Policy

Past studies on the relationship between dividend policy and firm performance continue being an unresolved predicament with few studies interrogating the causality relationship between financial performance and dividend policy. The purpose of this study was to establish the nature of relationship between financial performance and dividend policy of firms listed at the Nairobi securities exchange. The study applied positivism research philosophy and descriptive causal research design. The study was anchored on hypothetical view that the relationship between financial performance and dividend policy of firms listed at the Nairobi securities exchange is not significant which was tested against a sample size of 31 firms listed at the Nairobi securities exchange selected using purposive sampling technique. The research findings were as follows: There was a statistically significant direct association between return on equity and dividend policy. This implies that as firm profitability improve; a corresponding proportionate change in dividend payout ratio is initiated by management. In addition, it was established that there was a statistically significant positive linkage between operating cash flows and dividend policy which denotes that as cash flow levels from operating activities change, dividend payout ratio will change in the same direction leading to increased distribution of cash dividend to investors. Also, a statistically significant direct connection between price earnings and dividend policy was established. This relationship shows that increase in share market value positively prompts increased dividend payout ratio whereby the management follow a more acceptable dividend policy by the shareholders. However, market to book value depicted a weak insignificant inverse relationship with dividend policy and was dropped. In general it was concluded that the link between financial performance and dividend policy of firms listed at the Nairobi securities exchange was significant. The study outcome augment existing knowledge on financial performance and dividend policy for it is evident that firms with ability to generate income directly influence dividend payout ratio and therefore, top management should focus on financial performance strategies and not dividend policy which is irrelevant. Regulatory bodies such as Capital Market Authority and Centre for Corporate Governance use these research findings to improve their financial viability assessment approach of firms listed at the Nairobi securities exchange.

Do corporate governance and ownership structure impact dividend policy in emerging market during financial crisis?

PurposeThe purpose of this paper is to study the impact of the ownership structure and board governance on dividend policy in emerging markets. The authors test whether the effects of corporate governance on dividend policy change during crisis periods.Design/methodology/approachThe authors use a panel regression approach on a sample of 362 non-financial listed firms from East Asian and Gulf Cooperation Council countries.FindingsThe results provide evidence that dividend payout decision increases with institutional ownership and board activity. The authors find that in emerging countries, dividend policy of firms with CEO duality and without CEO duality does not depend on the same set of factors. It is shown that the ownership concentration and board independency affect significantly the dividend policy of firms with COE duality. Finally, the results show that during the recent financial crisis, dividend decision is inversely related to CEO duality, board size and the frequency of board meetings.Research limitations/implicationsOther variables of corporate governance and ownership structure can be studied more in depth. The results can be directly compared to an alternative sample of developed countries.Practical implicationsThis study is of particular interest for managers and shareholders when adjusting their strategies of dividend payout during financial crisis.Originality/valueThe authors employ a specific approach to investigate the impact of CEO duality on dividend policy in East Asian countries. An important aspect of the results is that that for firms with CEO who is also the chairperson, the dividend decision is negatively related to ownership concentration and board independence. This research contributes to the understanding of dividend policy by testing whether the impact of corporate governance on dividend policy changes during crisis periods in emerging countries. To the best of the authors’ knowledge, this work is the first to directly address this issue from this perspective.

The effect of family business professionalization on dividend payout

PurposeThe topic of dividend policies of private family-controlled firms has aroused the interest of corporate finance and governance scholars and practitioners alike. However, a lot of questions concerning the dividends in privately held family firms remain unanswered. The purpose of this paper is to examine whether a private family firm’s dividend payout is influenced by its degree of professionalization.Design/methodology/approachThe hypotheses are tested on a sample of 492 small to medium-sized Belgian family-controlled businesses with Tobit regression models.FindingsThe results show that professionalized family-controlled firms pay higher dividends to their shareholders than do less-professionalized firms. In particular, the use of financial control systems, non-family involvement in governance systems, and the use of human resource control systems have a positive significant impact on the average level of dividend payout.Practical implicationsThis study may be of interest to family business consultants and (potential) investors, as the results contradict the assumption that family businesses (especially those privately held) will always have a no or low dividend policy.Originality/valueInvestigating dividend payout in the context of other components than family ownership (in this case, professionalization) can broaden our understanding of dividend payout.

Factors Affecting Dividend Policy on Non-Financial Companies in Indonesia

Objective - The objective of this study is to obtain empirical evidence and analyse the factors that affect the dividend policy of non-financial firms listed on the Indonesian Stock Exchange. The factors studied include liquidity, leverage, growth, price/earnings, size, earnings per share, price to book ratio, ownership, age of the firm, floating rate, profitability, and free cash flow. Methodology/Technique - The sampling method used in this study is purposive sampling, in which the samples are taken based on suitable characteristics of the population to generate representative samples. The total number of samples in this study are 105 non-financial firms listed on the Indonesian Stock Exchange between 2011 and 2015. The hypothesis is tested by using multiple regression analysis. Findings - The results of this study show that earnings per share, price to book ratio, and floating rate affect the dividends policy while liquidity, leverage, growth, price/earnings, size, ownership, age of the firm, profitability, and free cash flow has no effect on dividend policy. Novelty - The study findings contribute the companies to establish an appropriate dividend policy to satisfy the interest of both parties that is companies future growth and its investors. Type of Paper: Empirical Keywords: Dividend Policy; Price to Book Ratio; Ownership; Age of the Firm; Floating Rate; Free Cash Flow. JEL Classification: G32, G35, M41.

Stock Market Liquidity And Dividend Policy In Korean Corporations

The liquidity hypothesis predicts a negative relationship between stock liquidity and dividend payout propensity, i.e., a firm will decide to pay dividends to compensate for the liquidity demand of investors. This study comprehensively examines whether the liquidity hypothesis applies to the sample of Korean firms listed in the KOSPI and KOSDAQ markets. The main results of this paper are as follows. First, the dividend policy in Korean firms does not support the liquidity hypothesis, contradictory to the existing empirical studies. Next, the explanatory power of the liquidity hypothesis is even weaker for the KOSDAQ market, inconsistent with international evidence. Finally, even when we focus on the firm-year observations with non-negligible dividend payments, the liquidity hypothesis does not explain the dividend policy of Korean firms either. Our findings significantly contribute to the literature by robustly confirming the very limited role of the liquidity hypothesis for Korean financial markets.

An Analysis of the Dividend Policy for Public Enterprises in Korea: An Application of the Dividend Decision Model for Private Firms

정부는 공공기관 배당성향 산출 기준에 객관성과 일관성을 제고하기 위하여 공공기관의 재무성과를 포함한 다양한 요인을 고려하는 배당정책 결정방식을 지난 2010년 도입하였다. 본 연구는 공공기관 배당정책의 개선 이후 공공기관의 배당성향이 민간기업과 비교하여 어떠한 수준으로 변화하였는지 살펴보기 위하여 민간기업의 배당성향 결정요인을 실증적으로 분석하고 이러한 결정요인을 정부출자 공공기관에 적용했을 때의 배당성향을 예측하였다. 855개 비금융업 민간기업의 2010년 횡단면 자료를 이용하였다. 그 결과 기업규모, 수익성, 재무건전성, 경영위험 및 성장성이 배당성향에 영향을 미치는 것으로 나타났다. 추정결과를 바탕으로 24개 공공기관의 배당성향을 예측한 결과, 현재 공공기관의 평균 배당성향은 민간기업보다 낮게 결정되고 있음을 보였다. 기관별로 살펴보면, 14개 기관에서 예상 배당성향이 실제 배당성향보다 높게 추정되었으며 9개 기관에서는 반대의 경우가 예측되었다. 또한 공공기관은 민간기업과는 다르게 배당성향의 결정에 있어 기관의 특성과 재무상황을 반영하지 못하고 있는 것으로 나타났다. 특히 자본규모가 큰 SOC 공기업과 에너지 공기업의 배당성향이 민간 기업에 비하여 낮게 결정되는 구조적인 문제가 존재하였다.This paper compares the dividend policy of state-owned enterprises with that of private firms in Korea. It estimated the determinants of private firms dividend policy using the cross-section data of 855 firms. The results show that the size, profitability, operation risk, growth rate affected the dividend policy of private firms. Then estimation coefficients were used to simulate the dividend ratio of 24 state-owned enterprises. The simulation results found out that the actual average dividend ratio was lower than the predicted average dividend ratio. It implies that private firms tended to pay relatively higher dividend to their shareholders, and that the dividend policy of state-owned enterprises were not closely related with their financial status and characteristics. Especially, the predicted dividend ratio was estimated higher than the actual dividend ratio in SOC and energy industry.

Penerapan Manajemen Risiko Perusahaan dan Nilai Perusahaan di Sektor Konstruksi dan Properti

Implementation of Enterprise Risk Management and Firms' Value at Construction and Property Sectors The objective of this study is to emphasize the effect of enterprise risk management (ERM) and control variable i.e: firm size, leverage, profitability, sales growth, shares volatility, and dividend policy toward firm value. This research employs multiple regressions as tool of analysis. The object of this research is construction and property firms that listed on BEI in period 2012-2014. The result of this research showed that ERM and control variable have a significant effect on firm value. However, partially, ERM doesn’t have significant effect on firm value. Further more leverage and sales growth variable have significant effect on firm value. The other funding is that size, leverage and dividend policy have significant correlation on ERM. DOI: 10.15408/ess.v7i2.4981

Determinants of Dividend Policy of petroleum firms in Nigeria

Determinants of Dividend Policy of petroleum firms in Nigeria

Value drivers in Oil Companies: An Application of Variance Based Structure Equation Model

This study aims to provide new insights into how the financial and operational information relate to the market valuation of both independent and integrated oil companies. Hence, the study examines the value drivers for value creation in oil firms. Specifically, it explores the effect of investment, financing, and dividend decisions on value creation in oil-based energy firms. It is important to identify factors for value creation in stock market to design effective policies for wealth creation. The study was based on 82 oil and energy firms selected based on average asset sizes and revenues during the 2009-2013 period. PLS SEM methodology was used to analyze the effect of various exogenous latent variables on the endogenous latent constructs of profitability and value creation. Higher earning potential was associated with greater value creation for oil firms. Markets view high capital investments by oil companies positively, as these investments represent value creation for oil and gas firms. Higher cash flows lead to greater value creation for energy firms, and they might lead to greater profitability and hence greater value creation. Dividend policy of oil and gas firms also determines the valuation of oil firms. Higher dividend payout enhances the value of oil and gas firms. Profitability determines value creation in oil and gas firms. The study did not find statistically significant differences between integrated and independent companies or between privatized national companies and private national companies in value creation among oil firms. Keywords: Valuation, Investment Policy, Financing Decisions, Market Valuation, PLS, SEM To cite this document: Rajesh Kumar and Sujit K Sukumaran, Value drivers in Oil Companies: An Application of Variance Based Structure Equation Model, Contemporary Management Research, Vol.13, No.1, pp. 31-52, 2017. Permanent link to this document: http://dx.doi.org/10.7903/cmr.16165

Effect of Corporate Governance Index on Dividend Policy: An Investigation of Textile Industry of Pakistan

This study empirically observes the impact of corporate governance index on dividend payout policy by using the data on thirty textile firms listed at Karachi Stock Exchange. The data cover the five-year period from 2009 to 2013. The data were gathered from financial statements of all the sample firms. Multiple regression models were used to check the impact of corporate governance on dividend policy. No effect of corporate governance index on firm dividend policy was found, and the largest shareholders also had no impact on dividend payout policy. A significant positive relationship was found between payout policy and stock value. Gross profit margin and operating profit margin had significant positive impact on the firm’s dividend payout policy. There is a significant correlation between the firm’s performance and payout policy.

CEO emotional intelligence and firm dividend policy: decision tree analysis

This paper assumes that managers, investors or both behave irrationally. More specifically, it examines the links between managerial emotional characteristics' and firm dividend policy. This stream of research argues whether to distribute dividends or not depends on CEO emotional intelligence level. We introduce an approach based on decision tree analysis technique with a series of semi-directive interviews. The originality of this research paper is guaranteed since it treats the behavioural corporate policy choice in emergent markets. To the best of our knowledge, this is the first study in the Tunisian context that explores such area of research. Our results show that CEO emotional intelligence level encouraged using this leverage to report the decision performance of the business, the application of a dividend distribution policy.

Determinants of corporate dividend policy: evidence from romanian listed companies

Although there is a vast literature that has investigated the dividend policies of firms from developed countries, relatively little research has been published exploring the dividend policies of firms from emerging countries. The literature regarding establishing the relationship between dividend policy and the attributes of non-financial companies listed on Romanian stock market, to the best of our knowledge, remains inexistent. The aim of this study is to identify the main factors influencing dividend policy for the non-financial companies listed on the Bucharest Stock Exchange for a period of ten years from 2007 to 2016. In order to achieve this aim, panel data were collected from the listed companies’ reports and financial statements. The study reveals that dividend policy is positively related to corporate profitability and liquidity and negatively associated with leverage, size, growth, and the state of the economy.