Dividend Policy Research Articles

An approach for regime-switching stochastic control problems with memory and terminal conditions

In this research article, we focus on a stochastic optimal control problem with two types of terminal constraints. These specific conditions provide real-valued and stochastic Lagrange multipliers. Our model evolves according to a Markov regime-switching jump diffusion model with memory. In this context, the memory is represented by a Stochastic Differential Delay Equation. We present two theorems for each constraint within the general formulation of stochastic optimal control theory in a Lagrangian environment. We approach to this task from a theoretical perspective and provide mild technical assumptions, which make our theorems applicable for a broad class of stochastic control problems as well as for a wide range of disciplines such as engineering, biology, operations research, medicine, computer science and economics. In this work, we apply Stochastic Maximum Principle to demonstrate an optimal dividend policy corresponding to a time-delayed wealth process of a company. Moreover, we determine the real-valued Lagrange multiplier of this control problem explicitly.

The impact of environmental, social and governance (ESG) performance on the duration of dividend sustainability: a survival analysis

PurposeThis study investigates the impact of ESG performance on the duration of dividend sustainability, introducing survival analysis as a novel methodological approach in this context and highlighting its differences from commonly used regression analyses such as OLS and logistic regression.Design/methodology/approachSurvival analysis methods, including Kaplan–Meier estimates and Cox proportional hazards time-dependent regression, were employed to examine data from publicly listed companies in Taiwan between 2016 and 2023. Additionally, logistic regression was tested to compare results with those from the survival analysis.FindingsWhile overall ESG performance did not show a significant impact on the duration of dividend sustainability, a detailed analysis of the individual ESG components revealed that the environmental performance component can extend the duration of dividend sustainability.Research limitations/implicationsThe findings based on companies in Taiwan may not generalize to other contexts. However, this study primarily highlights the application of survival analysis in ESG-related literature. Future research could explore similar analyses in different international settings to better understand the broader applicability of these results.Practical implicationsThe results suggest that the impact of ESG performance on dividend amounts and the duration of dividend sustainability are distinct issues. Investors and stakeholders should consider these differences when assessing corporate performance and making investment decisions.Social implicationsThe study highlights the importance of environmental sustainability in corporate dividend policies, indicating that companies with better environmental performance provide more stable returns.Originality/valueThis study introduces survival analysis to the study of ESG performance and the duration of dividend sustainability, addressing a gap in the literature by focusing on the duration of dividends rather than their amount.

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

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

The Influence of Profitability and Dividend Policy on Company Stock Prices with Good Corporate Governance as a Moderating Variable (Study on IDX High Dividend 20 Period 2020-2022)

The research conducted aims to see the effect of profitability ratio, dividend policy on stock prices with good corporate governance as a moderating variable on the IDX High Dividend 20 index for the period 2020-2022. The analysis techniques used are descriptive statistics, classical assumption tests, moderated regression analysis (MRA) tests, and hypothesis tests with the SPSS version 29 program. The results of this study indicate that partially profitability has an effect on stock prices, dividend policy has no effect on stock prices and good corporate governance cannot moderate the relationship between profitability and dividend policy on stock prices on the IDX High Dividend 20 for the period 2020-2022.

CORPORATE DIVIDEND DECISION AND FIRM VALUE IN NIGERIA

Corporate dividend decisions play a significant role in managerial decisions, and is often considered as the fulcrum of financial management decisions. While making these decisions, corporate finance is single-minded about maximizing the value of the firm. But the raging issue has been the lack of consensus on the effect of dividend policy on firm. This study therefore undertakes a comprehensive review of dividend policy theories and empirical studies on dividend policy in relation to firm value, with particular focus on Nigeria. The paper adopts the exploratory research approach using secondary data sources involving extensive review of relevant articles, theoretical and empirical studies, as well as other relevant materials. The paper established that, despite the raging theoretical controversies and contradictions of past empirical findings, there is unanimity among many researchers that corporate dividend decisions exert significant influence on firm value- a position which validates the arguments in favour of the relevance of dividends policy in determining firm value. The paper therefore recommends that finance managers of firms should aim at finding an optimal dividend policy, which is the one that maximizes the company stock price that leads to the maximization of firm value.

FACTORS THAT INFLUENCE THE VALUE OF INFRASTRUCTURE COMPANIES LISTED ON THE INDONESIAN STOCK EXCHANGE

This study aims to determine the effect of dividend policy, capital structure, profiitability and leverage on firm value. This research uses quantitave data, the sample in this study is infrastructure sector companies which are listed on Indonesia Stock Exchange in the period 2017-2022 as many as 14 companies. The analysis technique used to test the hypothesis is multiple regression analysis using Eviews 9 Software. The results of this study indicate that the dividend policy variabel has a positive and statistically insignificant effect on firm value, the capital structure variabel has a positive and statistically insignificat effect on firm value, the profitability has a positive and statistically signifinact and the leverage variabel has a positive and statistically insignificant on firm value. This study focuses on firm value, where this study focuses on infrastructure sector companies.

The Effect of Financial Leverage, Profitability and Dividend Policy on Firm Value

This research provides valuable insights into the factors influencing company value within the manufacturing sector, specifically the cement subsector in Indonesia. Financial leverage, profitability, and dividend policy are key variables examined, as they significantly impact a company's financial health and market perception. Financial leverage reflects a company’s reliance on debt financing relative to equity, and the study shows that higher leverage can positively affect company value if managed effectively, thereby increasing returns for shareholders. Profitability, often measured through indicators such as Return on Assets (ROA) or Return on Equity (ROE), also plays a significant role in enhancing company value, as it reflects efficient resource management and attracts investor interest. Additionally, a consistent dividend policy reinforces the company’s reputation and draws investors, contributing positively to company value in the stock market. The findings emphasize that cement subsector companies with balanced leverage, solid profitability, and a consistent dividend policy tend to perform better in terms of company value, providing essential insights for stakeholders in optimizing strategies to maximize company value.

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

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

A Study of Controlling Shareholders’ Equity Pledge Rate Based on Dividend Policy and Barrier Option

A Study of Controlling Shareholders’ Equity Pledge Rate Based on Dividend Policy and Barrier Option

The Influence of Return on Asset, Debt to Total Asset Ratio, and Economic Value Added, on Company Value with Dividends as a Moderating Variable in Industrial Sector Companies

The purpose of this study is to determine the Effect of Return On Assets, Debt To Total Assets Ratio, and Economic Value Added on Company Value with Dividend Policy as a Moderating Variable in Industrial Sector Companies. The sampling technique in this study is purposive sampling. So that the number of samples obtained is 54 companies. The tests used are Normality Test, Multicollinearity Test, Heteroscedasticity Test, Autocorrelation Test, Interaction Test / MRA. The correlation coefficient value is 0.177, meaning that between ROA, DAR, EVA and Dividend Policy on company value, the relationship is low. The determination coefficient value (R²) or R square obtained is 0.031, indicating that 3.1% of the influence on company value is explained by the variables ROA, DAR, EVA and Dividend Policy. While the remaining 96.6% is influenced by other variables not examined in this study.

Economic policy uncertainty and dividend policy: Insight from private firms

This study examines whether economic policy uncertainty (EPU) is associated with corporate dividend policy. Using a sample of private firms, we find that EPU is negatively related to dividend payouts. Our main findings are robust to endogeneity concerns, omitted variable problems, simultaneity bias, and alternative measures of EPU. Further, we find that firms are less likely to pay dividends when EPU is higher, confirming our main results. We also find that the negative relation between EPU and dividend payouts is stronger for firms with higher leverage, operating cash flows, sales growth, return on assets, and cash flow volatility than their counterparts. In contrast, the negative relation is weaker for firms with higher retained earnings-to-total equity ratios. Our study highlights that issues such as EPU can influence the dividend payout policies of private firms.

Dividend policy as an intervening variable between return on asset and earning per share on stock prices

Purpose - The aim of this study is to investigate how Return on Asset (ROA) and Earnings per Share (EPS) impact stock prices, while considering dividend policy as a mediating factor.Method - This research uses 6 samples of pharmaceutical companies listed on ISSI during the period of 2017-2021 using purposive sampling technique. The data analysis used in this research is SEM-PLS with the help of WarpPLS software version 7.0.Result - The findings indicate that dividend policy does not act as a mediator between ROA and share prices; however, it does serve as a mediator between EPS and share prices. The direct effects reveal that ROA has a non-significant positive impact on dividend policy, whereas EPS demonstrates a significant positive influence on dividend policy. Both ROA and dividend policy exhibit a significant negative impact on share prices, whereas EPS has a positive and significant influence on share prices. In addition, this research reveals that dividend policy is unable to mediate the relationship between ROA and share prices but is proven to mediate the relationship between EPS and stock prices.Implication - The concept of signaling theory in general can still be used in carrying out financial analysis even when anomalies occur in economic conditions.Originality - This research is research conducted on pharmaceutical companies which are different from other companies which have experienced negative impacts, but pharmaceutical companies have experienced an increase in share prices and profits during the pandemic.

The Effect of Dividend Yield on The Volatility of Stock Prices of IDX30 Index Companies Listed on the Indonesia Stock Exchange for the 2019-2023 Period

This study investigates the influence of Dividend Yield on Stock Price Volatility in companies included in the IDX30 index on the Indonesia Stock Exchange (IDX) during the 2019-2023 period. Utilizing secondary data from annual reports of IDX30 companies, panel data regression analysis was conducted to examine the relationship between the variables. The findings reveal that Dividend Yield positively affects Stock Price Volatility, contradicting the initial hypothesis. The results indicate that an increase in Dividend Yield leads to higher Stock Price Volatility, while a decrease in Dividend Yield results in lower Stock Price Volatility. This research provides valuable insights for investors in understanding the dynamics between dividend policies and stock price fluctuations.

The Effect of Leverage on Company Value with Dividend Policy as a Mediating Variable and Business Risk as a Moderating Variable

This study aims to find out the effect of leverage on company value mediated by dividend policy and moderated by business risk in infrastructure sector companies listed on the IDX in the period 2017 – 2022. The research uses a quantitative method using secondary data from the financial statements of each company, both obtained through the IDX website and the official website of each company. Sampling uses a non-probability method on companies listed in the infrastructure sector listed on the IDX in 2017-2022. The research data is panel data analyzed using SPSS and Hayes Process with analysis stages, namely descriptive statistics to conditional process analysis. The results of the hypothesis test show that leverage has a negative and significant effect on the company's value, Dividend Policy has a positive and significant effect on the company's value, Leverage has no effect on the dividend policy, Dividend policy is unable to mediate the influence of leverage with the company's value, Business Risk is unable to moderate the influence of leverage with the dividend policy and Business Risk is able to moderate the influence of leverage with the company's value.

Dividend Policy and Share Price Volatility of Listed Construction Firms at the Nairobi Securities Exchange, Kenya

The inherent volatility in all stock market scares low risk takers from the financial market and is capable of deterring investments. One of the factors that drives investors’ reactions to stock pricing is the dividend policy. This study examined the influence of dividend policy on the volatility of stock prices of construction firms listed at the Nairobi Securities Exchange for the period spanning five (5) years from 2019 to 2023. The study was dealt with on the following objectives; to examine the influence of dividend pay-out on share price volatility of listed construction firms at the NSE, Kenya, to determine the influence of dividend yield on share price volatility of listed construction firms at the NSE, Kenya. The study was guided by the: Dividend relevance theory, and dividend irrelevance theory. This study adopted a correlational research design while dealing with the research objectives. A census method was employed in data collection before analysis of the audited financial statements that was downloaded from the firm websites in arriving at detailed and well informed conclusions by employing Multiple regression, Correlation and ANOVA techniques using the Statistical Package for Social Sciences (SPSS) to establish the existence (or lack of it) of the relationship between the independent variables and the dependent variable of the study. The findings revealed that dividend policy influenced share price volatility by; dividend pay-out ratio (r=0.111, β=0.036, t=4.7240); and dividend yield (r= -0.018, β= -0.003, t= 2.7130). The study recommended that potential and existing investors should opt for listed firms in the construction sector with a high dividend payout ratio compared to the earnings generated by the firms; Investors to invest in firms with high dividend payouts. The study achieved its main objective. Keywords: Dividend Policy, Dividend Pay-out, Dividend Yield, Share Price Volatility

How the Macroeconomic and Financial Structure Affects the Firm Value of a Large Telecommunication Company in Indonesia

TELKOM's strategic initiative, referred to as 5BM, acknowledges the company's considerable assets but notes that it has not yielded substantial profits. To address this, TELKOM has devised this strategy to improve its firm value. This study seeks to contribute to this goal by conducting research focused on analyzing the company's financial structure and evaluating the effects of financial structure, considering macroeconomic factors like interest rates, to enhance its overall value. The research employs a quantitative approach, using TELKOM’s financial data from 2014 to 2024, with variables such as firm size, liquidity ratio, leverage ratio, investment opportunity, efficiency level, profitability, and interest rates. The study applies multiple linear regression to assess the relationships between these independent variables and firm value, using Tobin’s Q as a measure of firm value. Descriptive statistical analysis is also conducted to summarize the characteristics of each research variable. Findings reveal that leverage negatively affects firm value, while firm size, liquidity, investment opportunity, efficiency level, and profitability have positive impacts. Although interest rates and dividend policy also contribute to firm value, their effects are not statistically significant. These results provide insights into the importance of TELKOM's financial structure in enhancing its market valuation

Dividend policy adjustments under bankruptcy law: Insights from distressed firms

This paper investigates the impact of the Insolvency and Bankruptcy Code (IBC) on the dividend policy of financially distressed Indian firms. Utilizing a dataset of 33,820 firm-year observations from 2003 to 2023, we employ a difference-in-difference framework to examine how the introduction of IBC influences dividend payouts. Our findings reveal that distressed firms pay more dividends post IBC than non distressed firms, primarily benefiting underlevered distressed firms by enhancing their access to credit. Conversely, overlevered distressed firms experience a reduction in dividend payouts post-IBC. Additionally, the study highlights that standalone distressed firms are more likely to increase dividend payouts post-IBC compared to their business group-affiliated counterparts, due to the latter's access to internal capital markets. These insights contribute to the understanding of how bankruptcy reforms impact the financial strategies of distressed firms and provide valuable implications for policymakers and stakeholders in emerging economies.

Liquidity, Solvability, Profitability, Size of Company Impact on Stock Prices In Health Service Companies - Hospitals With Dividend Policy As An Intervening Variable Listed On Indonesia Stock Exchange 2018 - 2022 Period

Liquidity, Solvability, Profitability, Size of Company Impact on Stock Prices In Health Service Companies - Hospitals With Dividend Policy As An Intervening Variable Listed On Indonesia Stock Exchange 2018 - 2022 Period

The Influence Of Institutional Ownership And Profitability On Company Value With Dividend Policy As A Moderating Variable

This research aims to examine the influence of institutional ownership and profitability on company value by considering dividend policy as a moderating variable in banking companies on the Indonesia Stock Exchange for the 2017-2022 period. The research method used is path coefficient analysis to test the relationship between variables. Data was obtained from annual reports of banking companies registered on the IDX. The research results show that there is a positive and significant influence between the profitability variable on company value with a significance value of 0.006 (<0.05) while the institutional ownership variable does not have a positive and insignificant influence with a significance value of 0.309 (>0.05). Apart from that, dividend policy as a moderating variable is able to influence the relationship between profitability and company value with a significance value of 0.000 (<0.05), while dividend policy is not able to influence the relationship between institutional ownership and company value. Thus, the conclusion of this research is that institutional ownership has no effect on company value with or without considering dividend policy, while profitability has a direct and significant influence on company value with or without considering dividend policy. Therefore, company management needs to pay attention to these factors in managing company policies and investments to increase long-term company value.

The Affect of Firm Size, Debt Policy, Profitability on Stock Returns: Moderating Role Dividend Policy

This research aims to examine the influence of Firm Size, Debt Policy and Profitability on Stock Returns with Dividend Policy as a moderating variable in non-financial Firms included in the LQ45 stock index on the Indonesia Stock Exchange (BEI) for the 2017-2022 period. The sampling technique in this research is the purposive sampling technique. This research uses secondary data, namely the firm's annual financial report (annual report) obtained from the official website of the Indonesian Stock Exchange (IDX). The analytical method used is multiple linear regression techniques and moderated regression analysis (MRA) with testing using the SPSS version 29.0 application. The research results show that Firm size has a positive and significant effect on stock returns. Debt policy and profitability have a negative and insignificant effect on stock returns. Dividend policy can moderate Firm size on stock returns. However, dividend policy does not moderate debt policy and profitability on stock returns; however, dividend policy can moderate the influence of Firm size, debt policy, and profitability simultaneously on stock returns. The managerial implications of this research show that Firm size, debt policy, and profitability have a significant influence on stock returns, while dividend policy can moderate this relationship.