Corporate growth and strategic payout policy

Chen, Bai-Sian; Chen, Hongyi; Chen, Hsiao-Yin; Lin, Fang-Chi

doi:10.1007/s11156-022-01053-z

Cited by 6 publications

(2 citation statements)

References 48 publications

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“…Ellahie and Kaplan (2021) show that dividends contain information about future earnings in countries with weak institutions. Chen et al (2022) find that high-growth firms can pay more dividends for signaling purposes and the market favours such signals. Similarly, Lin and Lee (2021) add that signaling of future earnings by dividends is also applicable to the case of sticky dividends.…”

Section: Relationship Between Dividends Stock Prices and Earningsmentioning

confidence: 90%

What do dividend changes reveal? Theory and evidence from a unique environment

AlGhazali,

Al-Yahyaee,

Fairchild

et al. 2023

Rev Quant Finan Acc

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We explore the reasons behind corporate dividend changes and factors driving those changes during 2001–2021 in Oman, as a unique environment. The implications of our paper contrast with the relevant existing literature which demonstrates a positive correlation between dividends and stock prices in Oman, in support of the signaling theory. Employing multiple methods and after controlling for the nonlinearity in the profitability process, we find virtually no evidence for the signaling theory of dividends for dividend reductions, in terms of future earnings. Furthermore, our analysis affirms the importance of current profitability in influencing the magnitude of and the propensity to change (increase or decrease) dividends in listed Omani firms. We also find that the catering theory of dividends does not have any explanatory power on dividend changes. Further, firms’ life-cycle status and real investments have been found to significantly affect the decision to change dividends. Our results, which depart from the findings in the conventional literature, can be attributed to the distinct institutional features in Oman. Our game-theoretic model of dividend signaling/dividend catering provides some explanations.

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Section: Relationship Between Dividends Stock Prices and Earningsmentioning

confidence: 90%

What do dividend changes reveal? Theory and evidence from a unique environment

AlGhazali,

Al-Yahyaee,

Fairchild

et al. 2023

Rev Quant Finan Acc

View full text Add to dashboard Cite

show abstract

“…Firms with high earnings distributions tend to have low to-moderate growth, and firms with low earnings distributions run the range between high and low performers (Dempsey et al, 2019). Still, high-growth firms pay dividends to signal, rather than reduce, the problem of free cash flow (Chen et al, 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Policy and Companies’ Sustainable Growth

Naumoski

2022

Economic Themes

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This paper investigates the intercompany-specific characteristics as a determinant of the sustainable growth rate. We researched a sample of companies listed on the Macedonian stock exchanges. We found that the average actual growth rate for the 2010-2019 period is only 0.38%, while the sustainable growth rate was 1.42%. This is because of the poor operating performance of the companies, moderate leverage, and average retention ratio of 82.5% for the whole sample. The actual growth rate in specific years is drastically higher than the sustainable growth rate, while in certain years it is negative. The sustainable growth rate is positively affected by the profit margin, retention ratio, asset turnover, financial leverage, and ROE, and it is negatively affected by the operating cash flow, company size, growth opportunities, and non-debt tax shield.

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Do investors infer future cash flow volatility based on liquidity?

Angelo

Johnston

2022

Rev Quant Finan Acc

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Corporate growth and strategic payout policy

Cited by 6 publications

References 48 publications

What do dividend changes reveal? Theory and evidence from a unique environment

What do dividend changes reveal? Theory and evidence from a unique environment

Financial Policy and Companies’ Sustainable Growth

Do investors infer future cash flow volatility based on liquidity?

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