Does asymmetric information drive UK dividends propensity?

Basiddiq, Husam; Hussainey, Khaled

doi:10.1108/09675421211281344

Cited by 23 publications

(18 citation statements)

References 43 publications

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“…Analyst following is considered as one of the most important determinants of corporate valuation (i.e., Claessens et al, 2002;Lang et al, 2003), the cost of equity capital (i.e., Bowen et al, 2008), market liquidity (i.e., Attig, et al 2006), and dividend payment decision (i.e., Basiddiq and Hussainey, 2010). In addition, prior research finds that firms with high quality corporate governance mechanisms are more likely to be followed by a large number of financial analysts and that higher analyst following is associated with higher valuation for firms facing governance problems (Lang et al, 2004).…”

Section: Introductionmentioning

confidence: 99%

Corporate governance, analyst following and firm value

Mouselli

Hussainey

2014

Corporate Governance

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We examine the impact of a firm's corporate governance mechanisms on the number of financial analysts following UK firms. We also examine the potential effect of the number of analyst following firms in the United Kingdom (UK) on the association between corporate governance mechanisms and firm value. Methodology: We use multiple regression models to examine the association between corporate governance, analyst coverage and firm value for a large sample of UK firms listed in London Stock Exchange with financial year-ends between January 2003 and December 2008. Findings: We find that the aggregate level of corporate governance quality is positively associated with the number of analysts following UK firms. We also find that compensation score is the main component that affects the number of analysts following UK firms. Our results suggest that financial analysts are particularly concerned with how much compensation that executives and directors receive. This is consistent with Jensen and Meckling (1976) who argue that CEO compensation can be used as effective mechanisms for mitigating agency costs. Hence higher levels of CEO compensation attract attracts more financial analysts to follow the firm. Surprisingly, when we examine the joint effect of both corporate governance quality and the number of analysts following on firm value, we find no significant effect for both variables on firm value. Originality: We contribute to prior research by providing the first empirical evidence on the impact of disaggregated levels of corporate governance on analysts following and firm value for a large sample of UK firms.

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Section: Introductionmentioning

confidence: 99%

Corporate governance, analyst following and firm value

Mouselli

Hussainey

2014

Corporate Governance

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“…In respect to the relationship between the financial leverage ratio and the level of FLID, agency theory claims that highly leveraged firms have a greater contractual obligation to fulfil the information requests of long-term and short-term lenders, and therefore may offer more details to meet those needs than would a less leveraged company (Watson et al, 2002;García-Meca and Sánchez-Ballesta, 2009). The literature has reported that leverage ratio has an effect on the level of FLI disclosures (Deshmukh, 2005;Li and Zhao, 2008;O'Sullivan et al, 2008;Hussainey and Walker, 2009;Basiddiq and Hussainey, 2012;Al-Najjar and Abed, 2014).…”

Section: Empirical Modelsmentioning

confidence: 99%

Gender diversity on boards and forward-looking information disclosure: evidence from Jordan

Aribi

Alqatamin

Arun

2018

JAEE

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Purpose The purpose of this paper is to provide empirical evidence of the relationship between female representation on the board and forward-looking information disclosures (FLIDs). Design/methodology/approach The study uses the content analysis to analyze the narrative evidence from the annual financial reports of non-financial Jordanian companies listed on the Amman Stock Exchange. The final sample consists of 1,206 firm-year observations during the period 2008-2013. Findings The study provides evidence that gender diversity on boards positively affects the level of FLIDs. Further to this, the study reveals that family firms disclose more information than non-family firms. Practical implications Results of this study could be beneficial for a number of users of financial information such as, regulators, investors, auditors and lenders. The users might consider the findings of this study when they are using the company’s financial information. Consequently, users of this information could be better assisted to make right decisions. Originality/value This study contributes to the literature by identifying the role of gender on the level of FLID, particularly on family and non-family, a relatively little researched area.

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“…The hypothesis given by Jensen and Meckling (38) is perceived as a benchmark for agency theory. They states that when managers are given responsibility to maximize the wealth of shareholder, the conflict of interest originate between shareholders (principals) and management (agents).…”

Section: Agency Theorymentioning

confidence: 99%

The Effect of Dividend Policy on Share Price: A Conceptual Review

Raza¹,

Ramakrishnan²,

Gillani³

et al. 2018

IJET

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In modern corporate world, dividend policy is one of the most debatable issues in corporate finance. The academic literature related to effect of dividend policy on share price has grown rapidly over the previous decade, due to its puzzling phenomena. The present study intends to conduct a non-systematic review of literature on the empirical and theoretical studies on corporate dividend policy in order to understand its nature and dimensions. In this concern, an extensive review of existing literature has been performed and it is found that there are three different approaches or schools of thought. First school of thought is that a rise in dividend payout will increase the firm value (share price). Second, thinks that a rise in dividend payout will reduce the firm value (share price) and third supports Miller and Modigliani (1) argument that firm value or share price are not affected by dividend policy. Till to date no consensus has appeared and results are inconclusive. This article also attempts to cover key empirical studies on dividend policy across countries, which shows that the phenomena of dividend policy differ from one country to another. The continuing nature and wide array of discussion on dividend policy has formulated a massive volume of literature that increase day by day. Therefore, it not feasible to do a full-fledge review of all debates.

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Does asymmetric information drive UK dividends propensity?

Cited by 23 publications

References 43 publications

Corporate governance, analyst following and firm value

Corporate governance, analyst following and firm value

Gender diversity on boards and forward-looking information disclosure: evidence from Jordan

The Effect of Dividend Policy on Share Price: A Conceptual Review

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