Dividend reduction and stock price reaction in Indian market: is there a role of share repurchase?

Chatterjee, Chanchal; Tiwari, Sweta

doi:10.1108/jibr-11-2020-0348

Cited by 2 publications

(1 citation statement)

References 100 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Unlike the US companies that widely follow share repurchase as a payout mechanism, most Indian firms still use dividends for corporate payout. Only a small proportion of the total payout is made through repurchases by Indian firms (Pahi and Yadav, 2021; Chatterjee and Tiwari, 2022).…”

Section: Robustness Testsmentioning

confidence: 99%

Dividend policy and corporate life cycle: a study of Indian companies

Singh

Gupta²,

Chaudhary

2023

View full text Add to dashboard Cite

PurposeThe purpose of this paper is to investigate the relationship between dividend policy and the life cycle of firms in India. In addition, this study intends to examine the variation in dividend behaviour over the life cycle of a firm. The study anticipates that a firm's dividend behaviour varies over its life cycle.Design/methodology/approachTo scrutinize the validity of the proposition, the authors classify 1968 non-financial industrial firms listed at Bombay Stock Exchange (BSE) into growth, mature and stagnant firms over the period 2000–20. Additionally, to check the robustness of the results, they use an array of techniques such as analysis of variance, pooled ordinary least squares, fixed effects models and random effects models.FindingsThe empirical findings suggest that dividend behaviour varies over a firm's life cycle. Specifically, stagnant firms are paying significantly higher dividends than growth firms. Mature firms are paying significantly higher dividends than growth firms. The results are consistent after controlling the effects of firm's size, profitability, leverage, operating risk, systematic risk and growth opportunities.Research limitations/implicationsThe findings are useful for corporate decision makers in establishing an appropriate dividend policy conditional on firms' life cycle stage and for shareholders in making investment decisions.Originality/valueThe relation between dividend policy and firm life cycle has not been examined before in the context of Indian stock market. Thus, this research bridges this gap in the literature.

show abstract

Section: Robustness Testsmentioning

confidence: 99%

Dividend policy and corporate life cycle: a study of Indian companies

Singh

Gupta²,

Chaudhary

2023

View full text Add to dashboard Cite

show abstract

The impact of sustainable development on the relevance of accounting information and financial activities: Evidence from Thailand

Moolkham

2024

PLoS ONE

View full text Add to dashboard Cite

This study investigates the impact of sustainable development on the relevance of accounting information and financial activities of companies listed on the Stock Exchange of Thailand (SET). The results reveal that earnings per share and book value per share have a positive effect on market value, implying that higher earnings signal strong financial performance, thereby attracting more investor interest. Short-term and long-term debt financing have a negative effect on market value, suggesting that debt financing leads to increased financial risk. Current asset and fixed asset investments have a positive effect on market value by signaling confidence in operational performance. Dividend payouts have a positive effect on market value, demonstrating a commitment to returning value to investors, resulting in a stronger firm reputation and investor perception. However, firms that adhere to sustainable development guidelines face more complex dynamics. The results show that both earnings per share and book value per share have a negative effect on market value, suggesting that while they report high earnings per share and book value per share, these financial metrics cannot alleviate investor skepticism regarding sustainability as a cost of the firm. Short-term debt financing has a positive effect on market value because it provides a flexible and efficient way to fund sustainable investments without diluting equity or incurring long-term debt obligations, while the implications of long-term debt financing and current asset investments are insignificant. Furthermore, the significant positive effect of fixed asset investment underscores the potential long-term benefits of sustainability, despite high initial costs. Lastly, the non-significant negative impact of dividend payouts on market value suggests that the overall effect may also depend on various factors. These results support the idea of efficient market theory, which posits that investors may have negative reactions to what they perceive as financial burdens, diminishing the importance of positive financial metrics and altering market value. This study recommends that policymakers should carefully design regulations and incentives to support sustainable investments. Such approaches may include establishing specific funds, tax incentives, subsidies, and soft loans. Additionally, policymakers need to promote transparency and consistent reporting on the long-term financial benefits of sustainability, which can help reduce investor skepticism and foster a more positive market response. Finally, firms should clearly communicate their long-term sustainability efforts and benefits to investors and various stakeholders, leading to a positive interpretation of the firm’s commitment to sustainable development.

show abstract

Dividend reduction and stock price reaction in Indian market: is there a role of share repurchase?

Cited by 2 publications

References 100 publications

Dividend policy and corporate life cycle: a study of Indian companies

Dividend policy and corporate life cycle: a study of Indian companies

The impact of sustainable development on the relevance of accounting information and financial activities: Evidence from Thailand

Contact Info

Product

Resources

About