Higher Dividends Research Articles

The Role of ESG (Environmental, Social, Governance) on Dividends and Firm Value: The Moderation Effect of Audit Quality

<p>This research will examine the influence of ESG (Environmental, Social, Governance) and its components on dividends and firm value. Furthermore, the quality and credibility of information in the market will also influence stakeholder assessments. The important role of audit quality in providing assurance on this information is needed. By using multiple linear regression on 252 firm years from companies listed in IDX 2020-2023 that meet the sample criteria, it was found that ESG has not been able to significantly influence dividends and firm value. However, environmental can influence dividends in a positive way, while governance can influence firm value in a negative way. Even though dividends and audit quality can influence firm value in a positive way, audit quality still cannot increase the influence of dividends on firm value. Audit quality also cannot increase the influence of ESG on dividends. In this case, inefficient ESG practices followed by poor audit quality are the main factor of this insignificant influence. It takes time for ESG investments to influence company performance, which has an impact on high dividend payout ratios and firm value.</p>

Analisis Signifikansi Pengaruh Dividend Payout Ratio, Earning Per Share dan Debt to Equity Ratio terhadap Return Saham

This study examines the influence of Dividend Payout Ratio (DPR), Earning Per Share (EPS), and Debt to Equity Ratio (DER) on Stock Returns in companies listed on the LQ45 Index of the Indonesia Stock Exchange (IDX) during the 2021–2023 period. Using a quantitative approach, this research analyzed data from annual financial reports of 22 companies selected through purposive sampling, with a total of 66 observations. Multiple linear regression analysis was employed to evaluate the relationships between variables. The results indicate that DPR and EPS have a positive and significant impact on Stock Returns, with respective p-values of 0.001. This suggests that higher dividends and improved financial performance significantly enhance stock returns. On the other hand, DER does not have a significant influence on Stock Returns. This study provides practical implications for companies to strengthen their dividend policies and financial performance to attract investors. Investors are recommended to use DPR and EPS as primary indicators in forming an optimal investment portfolio. The findings contribute to the theoretical literature on financial ratios and stock performance in developing markets and suggest opportunities for future research, including additional variables such as macroeconomic factors or market conditions, to enhance Stock Return prediction models.

The Influence of Corporate Social Responsibility (CSR) and Environmental Social Governance (ESG) Disclosure on Profitability in Companies in the IDX ESG & IDX HIDIV20 Sector from 2020 to 2023

This research aims to analyze and evaluate the effect of Corporate Social Responsibility (CSR) and Environmental Social Governance (ESG) disclosures on corporate profitability. The focus of this study is to identify how CSR and ESG practices disclosed by companies affect key profitability indicators such as Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). The object of research is companies listed on the Indonesia Stock Exchange, including IDX ESG Leaders Index (IDX ESG LID) and IDX High Dividend 20 (IDX HIDIV20) in 2020-2023; the sample is 25 companies. In this study, the analysis technique used was Structural Equation Modeling (SEM) PLS conducted using the WARP PLS (Weighted Autoregressive Distributed Lag PLS) method. The results showed that CSR disclosure has a positive and significant influence on corporate profitability, while ESG disclosure has a negative and significant influence. The study's implications suggest that CSR implementation can enhance financial performance, whereas ESG disclosure, despite offering long-term benefits, often requires significant initial investment, which can reduce short-term profitability.

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.

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

RETurning to REITs

We examine the valuation and return performance of real estate trusts (RETs), the 19th-century predecessors of REITs. Unlike REITs, RETs were not constrained by the formal regulatory framework that REITs are subject to today. Our findings indicate that, like modern-day REITs, the primary driver of RET valuations is dividend growth rather than changes in the discount rate. RETs also exhibited performance trends like REITs, particularly during the financial downturns. We find a positive relationship between credit availability and excess returns for both RETs and REITs. Additionally, RETs shared several characteristics with modern-day REITs, such as high dividend payouts from cash flows, low leverage, and non-taxable status at the trust level. However, RETs largely disappeared as public stocks when the Morrissey ruling in 1935 removed their tax benefits. This raises the question of whether regulators should reconsider some statutory REIT requirements which currently limit REIT growth.

Analisis Abnormal Return dan Trading Volume Activity Sebelum dan Sesudah Ex-Dividend Date: Studi Kasus pada Perusahaan High Dividend 20 yang Terdaftar di Bursa Efek Inodnesia Tahun 2023

This research aims to determine whether or not there are differences in abnormal returns and trading volume activity before and after the ex-dividend date in 20 high dividend companies listed on the Indonesia Stock Exchange in 2023. The type of method used in this research is a quantitative method. The sampling technique used was purposive sampling. There were 20 companies used as samples in the research. Research data taken for 30 days consists of 5 days, 10 days and 15 days before and after the ex-dividend date. The analysis used was the paired sample t-test and the Wilcoxon Signs rank test. Based on the research results, it shows that 1) there is no significant difference in abnormal returns before and after the ex-dividend date in high dividend 20 companies. 2) there is a significant difference in trading volume activity before and after the ex-dividend date in high dividend 20 companies.

Corporate social initiatives and wealth creation for firms-an empirical examination

Purpose This study aims to examine whether social initiatives adopted by firms lead to improved financial performance. The authors analyse the impact of different elements of social initiatives on wealth creation for firms in terms of operating and market performance. Design/methodology/approach The study is based on the social initiative scores of over 4,500 firms collected from Thomson Reuters' ESG database. The study uses two-stage least squares (2SLS) to analyse the relationship between social initiatives and firm performance. Findings Profitable, mature, capital intensive and firms with high sales growth rate tend to invest more in social initiatives. Firms with high agency costs invest in social initiatives for workforce efficiency, maintaining human rights and product responsibility. The study documents evidence that social investments are value creating mechanism for firms which leads to improved financial performance in terms of operating and stock market performance. Firms with high dividend intensity invest in social initiatives for workforce welfare and human rights initiatives. Investment in employee well-being and community initiatives results in intangible benefits such as improved stock market valuation. Practical implications The research model has not considered the impact of intervening variables to understand the relationship between corporate social performance and corporate financial performance. Social implications Firms ought to recognize that social investment is beneficial in terms of value creation of firms as stock market perceive such investments favourably. Firms must focus more on community development initiatives and workforce initiatives for the value creation of firms compared to investments directed towards human rights initiatives and product responsibility initiatives. Originality/value This study focusses exclusively on the social dimension of the CSR activities. The authors examine the impact of social welfare scores on firm performance by analysing the valuation effects on scores representing workforce, human rights, community and product responsibility. Moreover, the paper also examines the impact of a new dimension of product responsibility on firm performance. They also focus on both aspects of financial performance in terms of operating performance (proxied by ROE) and the joint impact of both operating and market performance (proxied by Tobin’s Q). This paper contributes to the research on the linkage of social performance to financial performance by observing that firms with high agency cost characteristics tend to invest in social initiatives for work force efficiency, maintaining human rights and product responsibility.

The Effect of Working Capital Management and Credit Management Policy on Financial Performance of Banking Companies Listed on the Indonesian Stock Exchange in 2019 -2022

The high dividends paid by banking sector companies to capital market investors have led the OJK as a regulator to take action to regulate the portion of banking companies dividends which is considered excessive and could jeopardize bank stability. This study examines the role of Working Capital Management and Credit Management Policy as independent variables that influence bank Financial Performance. Using panel data from 34 Indonesian banks listed on the Indonesian Stock Exchange from 2019 to 2022, We investigate the effect of various WCM components (i.e., Bank Size (BS), Debt Ratio (DR), Current Ratio (CR), and CMP (i.e., Equity Ratio to Risky Assets (ERRA), Rate of A Bank's Ability to Return Deposits (RBARD), and Average Collection Period (ACP)) on the company's financial performance by looking Return on Assets (ROA). Multiple regression analysis was performed using Stata 14 software to evaluate the hypothesis. The findings revealed that WCM and CMP were only able to explain about 11.96% of changes in the dependent variable. The outcomes of this study suggest that banks should pay attention to capital resource allocation because excessive amounts of capital incur substantial costs. If equity is dominated by debt and shares, excess capital will have a detrimental impact on the company's profit growth. In addition, as determined by the ACP variable, longer receivable terms may result in increased credit risk and decreased bank profits.

Do banks engage in earnings management? The role of dividends and institutional factors

We investigate the impact of dividend policy on earnings quality and opportunistic earnings management for individual banks across 45 developed and developing countries between 1996 and 2019. Our estimates show that high dividend payments reduce earnings management, hence mitigate agency problems. This mitigation is especially prevalent among well-capitalised and non-listed banks. Greater investor protection and government regulation appear to strengthen the negative association between dividend policy and earnings management. Our results hold robustly across many different specifications.

Board gender diversity, dividend payout, and firm value: study on IDX high dividend 20

Board gender diversity, dividend payout, and firm value: study on IDX high dividend 20

APPLICATION OF QUADRATIC PROGRAMMING ON PORTFOLIO OPTIMIZATION USING WOLFE’S METHOD AND PARTICLE SWARM OPTIMIZATION ALGORITHM

Stock portfolios can be modeled into quadratic programming problems using the Markowitz mean-variance model. Quadratic programming problems can be solved using two methods, namely classical and heuristic methods. In this research, the classical method uses Wolfe’s method, while the heuristic method uses the particle swarm optimization (PSO) algorithm. This research aims to determine optimal results in portfolio problems using two methods, namely Wolfe’s method and the PSO algorithm. The data used in this research is data from 10 stock companies that distribute the highest dividends in the IDX High Dividend 20 category for the 2022 period. The research results discuss the portfolios of PT Astra International Tbk and PT. Indo Tambangraya Megah Tbk. Based on the result, using Wolfe’s method, the ASII and ITMG stock portfolios are obtained, namely the optimal proportion of ASII shares = 0.76401 or 76.401% and ITMG shares = 0.23598 or 23.598%, while the PSO algorithm obtains a portfolio of ASII and ITMG shares, namely ASII shares = 75.02% and ITMG shares = 24.98%. Compared to Wolfe’s method, the PSO algorithm has a smaller Z value 5.7.

Effect of Dividend Payout and Yield on Market Value of Listed Insurance Firms in Nigeria

Despite extensive research on market value of firms and how dividend policies impact it, there is a limited understanding of how the market value of listed insurance firms in Nigeria is specifically affected by the dividend payout and dividend yield policies of the firm. This study seeks to address this gap by examining how dividend payout and dividend yield ratio affects market value of listed insurance firms in Nigeria. To achieve these objectives, longitudinal research design was employed, and the study utilized ten (10) listed insurance firms that had consistently published their audited annual financial reports from 2009 to 2023 and analyzed the data using panel multiple regression technique with the help of e-view 12 statistical tools. The result of the study shows that dividend payout ratio had negative and insignificant effect on market value of listed insurance firms in Nigeria, while dividend yield ratio had positive but significant effect on market value of listed insurance firms in Nigeria. In conclusion, these results highlight the nuanced role of dividend policies in influencing investor perceptions and firm valuation, suggesting that while high dividend yields can enhance market confidence and valuation, the effect of payout ratios on Price to Book Value (PBV) is less clear and may depend on additional contextual factors. The study therefore recommends that firms with high Dividend Payout Ratios (DPR) should clearly communicate their growth and reinvestment strategies to investors to mitigate perceptions of limited growth prospects and potentially enhance market valuation. Also, listed insurance firms should leverage the positive relationship between Dividend Yield (DY) and market value by implementing stable and attractive dividend policies, signaling financial stability and profitability to boost investor confidence and market valuation. Keywords: Dividend Payout Ratio, Dividend Yield, Market Value, Price to Book Value and Firm Size.

Analysis of the Investment Features of Stocks of Valuation System with Chinese Characteristics Based on Hierarchical Cluster Method

The ultimate goal of stock investment is to achieve profitability, and risk avoidance is the most important foundation for achieving profitability. Accurately evaluating the value of stocks in the market is one of the key factors for successful investment. Under the background of proposing the Valuation System with Chinese Characteristics, a reasonable analysis of the investment features of stocks of Valuation System with Chinese Characteristics can bring opportunities to investors. To this end, first construct the characteristic indices of stocks of Valuation System with Chinese Characteristics — Price Earnings Ratio (PE), Price-to-Book Ratio (PB), and Dividend Yield Ratio. Then, based on the characteristic indices, use the hierarchical cluster method to perform clustering analysis on the stocks of Valuation System with Chinese Characteristics. Afterwards, by optimizing the clustering results, all stocks of Valuation System with Chinese Characteristics were classified into four categories. According to the classification analysis of the investment features of the stocks, it can be concluded that the issuing company of the first category of stocks has recently been operating poorly, so it is not recommended to invest; The value of stocks in the second category is overestimated and it is not recommended to invest; The third category of stocks are high growth stocks, and it is recommended to invest with caution; The stocks in the fourth category have the characteristics of undervaluation and high dividends, and it is recommended to invest.

Are Companies Offloading Risk onto Employees in Times of Uncertainty? Insights from Corporate Pension Plans

We investigate how firms adjust corporate pension plans in response to economic policy uncertainty (EPU). Using a sample of US-listed firms, we find that firms increase pension underfunding levels when facing higher EPU. The result is robust to controlling for pension portfolio returns, discount rates, plan sizes, pension liability, numbers of employees, other macroeconomic factors, difference-in-differences and instrumental variable estimation, and additional evidence of pension risk-shifting. Further analysis reveals that financial distress and information asymmetry induced through EPU are the potential channels. The effect is stronger for firms having CEOs being excessively paid, using cash flow as a performance metric in CEO compensation, paying high dividends, and having short-term institutional investors, whereas the presence of unions, positive corporate culture, and social capital alleviate the effect. Notably, managers, not shareholders, appear to be the party reaping the benefits. Our findings suggest that firms may shift risk to employees in response to heightened uncertainty and institutional characteristics play a moderating role in this crucial business ethics issue.

The Effects of Dividend Policy On the Price of Shares of Microfinance Companies In Developing Countries

The strategy of dividend policy implementation in the context of business value growth is the subject of debates in theoretical and empirical research. Dividends and retained earnings are two alternatives that investors have when deciding how to distribute their income. According to the bird-in-the-hand theory, a company’s value is maximized by paying large dividends, because investors consider the payouts less risky than capital gains, regular high dividend payments serve as an information signal to market participations about the current and future financial stability, which attracts new investors and allows attracting more external resources. Instead, according to Miller and Modigliani’s dividend irrelevancy theory, corporate value is influenced not by the division of income into dividends and retained earnings, but by investment policy and income from assets. There is a lack of research in the literature that examines the relationship between dividend payouts and stock prices in developing countries (especially in Nepal) and there is no empirical evidence that profitability can moderate this relationship. The article examines the influence of dividend yield, retention ratio and dividend payout ratio on share price both in general and directly, and indirectly-through return on assets and return on equity. The information base is data for the 2017-2021 financial years on 61 Nepalese microfinance institutions (10 of which were the direct object of the study) registered on the Nepal Stock Exchange (NEPSE), obtained from the official websites of the relevant institutions, ShareSansar and NEPSE statistics. SPSS software (PROCESS v4.3) was used for data analysis. Descriptive statistics, the correlation and regression analysis were used for the analysis. The article analyzes three types of effects: total, direct and indirect. The overall effect of dividend yield on share price is negative, the retention ratio is positive and significant, and the dividend payout ratio is negative and significant. The direct effect of the dividend yield on the stock price is negative, the retention ratio and the dividend payout ratio are positive and insignificant. The indirect effect of dividend yield and retention ratio on share price through return on assets is negative and insignificant, and through return on equity it is positive and significant. The indirect effect of the dividend payout ratio through the return on assets is positive and significant. However, the return on shareholders’ capital has a negative and insignificant effect on the share price.

Clustering Defensive Shariah-compliant Stocks Using Financial Performance as the Indicator

Malaysian stocks, including Shariah-compliant stocks, have experienced turbulence last year. Although there are defensive stocks, the well-performing ones are not easily identified. Researchers have proposed various metrics to identify defensive stocks. However, most of the approaches require human intervention. In this study, we focus on Shariah-compliant stocks and propose to automate the labeling of stocks in terms of their financial performance via clustering. The study aims to identify the optimal clustering method to label the clusters. This was achieved by first employing k-Means, Agglomerative, and Mean Shift clustering to group similar stocks before labeling. When labeling, the criteria to distinguish well-performing defensive Shariah-compliant stocks were high dividend yield, low price-earnings ratio, low Beta value, and low price-to-book value. After labelling each stock with its financial performance (Low, Medium, High), we performed classification using Logistic Regression, k-Nearest Neighbors, Support Vector Machine, Decision Tree, and Random Forest to verify the credibility of the labels. Based on the results, the clusters created by k-Means clustering outperformed the rest in matching accuracy. Further investigation was conducted on the k-Means data set by dividing the data according to sector and classifying each sector’s data separately. Logistic Regression outperformed other classification algorithms with an accuracy of 71.5%. The findings also suggested accuracy increased when stocks were classified according to sectors. Further considerations include performing outlier analysis on the data to select well-performing stocks.

Pengaruh Kinerja Keuangan Terhadap Nilai Perusahaan Dengan Kebijakan Dividen Sebagai Variabel Moderasi Pada Idx High Dividend 20 Di Bursa Efek Indonesia Tahun 2018-2022

This study aims to obtain empirical evidence and test the influence of leverage, liquidity, and profitability on firm value which is moderated by dividend policy on the IDX High Dividend on the Indonesia Stock Exchange 2018-2023. This study uses a quantitative approach. Using the purposive sampling method, 62 companies were selected to be used as samples. The analysis method in this research uses multiple regression analysis and moderated regression analysis for moderating variables. The results of this research indicate that leverage, and liquidity have no effect on firm value. Meanwhile, profitability has a significant effect on firm value. Dividend policy as a moderating variable is not able to moderate each independent variable on firm value. Keywords: Dividend policy, Firm Value, Leverage, Liquidity, Profitability

Election-day market reactions to tax proposals: Evidence from a close vote

We ask whether stock markets react to political leaders' intentions to tax shareholders immediately following their election. Our natural laboratory is the surprising outcome of the September 2021 Japanese Prime Ministerial election. Using an event study approach, we find firms that are vulnerable to a potential tax increase, such as those paying or receiving dividends, demonstrate lower stock returns compared to their counterparts. In contrast, our analysis does not show differences in stock returns between firms earning interest income and those that do not. Moreover, among high dividend yield firms, a striking contrast emerges: those with substantial individual ownership show a decline in stock returns, while those with significant foreign ownership exhibit an increase. These results highlight the targeted impact of shareholder taxation on domestic shareholders, distinguishing them from debt holders or foreign investors, right from Election Day.

Cash flow management, performance and risk: evidence from Greece

PurposeI seek to identify whether cash flow management can affect the performance and risk of the Greek listed companies.Design/methodology/approachThis study examines the relationship of cash flow management with performance and risk, using a sample of 80 non-financial companies listed in the Athens Exchange. The study covers the period 2018–2022, and panel data analysis is applied. Both financial performance and stock return are taken into consideration, while risk concerns the volatility of the companies’ share prices. The various explanatory variables used include the net cash flow, free cash flow, cash conversion cycle days, cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, inventory days, customer days and supplier days.FindingsThe empirical results provide evidence of a positive relationship between financial performance and net cash flow and free cash flow. In addition, operating cash flow is positively related to financial performance. The opposite is the case for investing and financing cash flow. Finally, some evidence of a negative relationship between financial performance and inventory and customer days is provided too. On the other hand, stock return and risk are not related to the cash flow management variables at all.Originality/valueTo the best of my knowledge, this is one of the few studies to examine the relationship of cash flow management with performance and risk, using data from the Greek stock market. The results can form an effective selection tool for investors seeking Greek companies with the highest financial performance potential, which may reward them with higher dividends.