Does Information Asymmetry Affect Dividend Policy? Analysis Using Market Microstructure Variables

Kim, Seonhyeon; Jung, Jinyoung; Cho, Sung-woo

doi:10.3390/su13073627

Cited by 6 publications

(6 citation statements)

References 44 publications

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“…The study of pure moral hazard assumes that the agent's actions are not visible to the principal [21]. After Holmstrom proposed a general framework [22], many scholars have further developed it and applied it to different industries [23]. Based on PPP projects, Paez-Perez and Sanchez-Silva discussed a dynamic principal-agent model to solve the moral hazard problem caused by project information asymmetry [24].…”

Section: Literature Reviewmentioning

confidence: 99%

Design of Social Responsibility Incentive Contracts for Stakeholders of Megaprojects under Information Asymmetry

et al. 2022

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Social responsibility is essential to the sustainable development of megaprojects. A transparent and symmetrical information-sharing mechanism is an important guarantee for promoting megaproject stakeholders to fulfill their social responsibilities and improve project efficiency. Aiming at the problems of megaproject subcontractors concealing social responsibility information, which leads to unsmooth information channels and low project efficiency, this paper compares and analyzes the single-stage revenue-sharing model under symmetric and asymmetric information from the perspective of incentive contract design. Then, a two-stage incentive contract with multiple indicators under asymmetric information is designed using principal-agent theory. The research results show that the social responsibility effort level of the general contractor and the total project revenue is positively correlated with the input–output ratio, and is negatively correlated with the degree of information opacity of the subcontractor’s social responsibility. Incentive contracts with multiple indicators in stages can effectively encourage subcontractors to disclose social responsibility information, and reduce information asymmetry, therefore enhancing social responsibility and improving overall project efficiency. This research transforms the research on the social responsibility of megaprojects from qualitative to quantitative. The research results provide theoretical methods and decision-making basis for megaproject general contractors to encourage subcontractors to improve social responsibility.

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Section: Literature Reviewmentioning

confidence: 99%

Design of Social Responsibility Incentive Contracts for Stakeholders of Megaprojects under Information Asymmetry

et al. 2022

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“…In particular, researchers have paid much attention to firms' dividend and investment decisions in asymmetric information environments, given that these managerial decisions have direct implications for investors' wealth maximization (Arab et al, 2020;Basiddiq and Hussainey, 2012;Khabazkar Foomani and Sarlak, 2018;Kim et al, 2021).…”

Section: Asymmetric Information Environments 1779mentioning

confidence: 99%

“…Given the ubiquity of information asymmetry between firm management and investors, previous studies have made extensive efforts to understand how information asymmetry affects firm managers’ decision-making (Bergh et al , 2019). In particular, researchers have paid much attention to firms’ dividend and investment decisions in asymmetric information environments, given that these managerial decisions have direct implications for investors’ wealth maximization (Arab et al , 2020; Basiddiq and Hussainey, 2012; Khabazkar Foomani and Sarlak, 2018; Kim et al , 2021).…”

Section: Introductionmentioning

confidence: 99%

Dividend and investment decisions in asymmetric information environments: evidence from the restaurant industry

Gim

Jang²

2022

IJCHM

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Purpose This study aims to examine how information asymmetry, which refers to an information gap between a firm’s management and its investors regarding the firm’s true value, influences firms’ dividend and investment decisions in the restaurant industry. This study also investigated the moderating role of a firm’s level of franchising in the relationship between information asymmetry and these behaviors of restaurant firms. Design/methodology/approach This study used generalized method of moments panel regression analyses. Principal component analysis was also used to create a composite index of information symmetry. Findings This study demonstrated that in asymmetric information environments, restaurant managers tend to reduce dividend payments. In addition, this study showed that information asymmetry leads to restaurant managers’ investment inefficiency. However, the investment inefficiency of the restaurant industry was found to decrease as restaurant firms’ level of franchising increases. Practical implications Firms’ dividends and investment decisions are of great interest to investors because these decisions heavily influence investors’ wealth-maximization goals. By shedding light on the previously unrecognized determinants of dividend and investment behaviors in the restaurant industry, this study helps individual investors to make informed investing decisions. Originality/value Conflicting arguments can be made regarding the impact of asymmetric information environments on the dividend and investment behaviors of restaurant firms. This study aimed to verify these as-yet unclear relationships in the restaurant industry.

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“…Although various studies have already examined the dividend phenomenon in India, in light of the various changes observed in the Indian economy in the recent past, it has become essential to revisit the dividend puzzle to provide further insights about its evolving nature. Indian firms frequently opt for regular dividends as a signaling tool for reducing the prevailing information asymmetry (Kim et al, 2021;Kanojia & Bhatia, 2023). An increase in participation of retail investors in the equity markets over the last two decades has further bolstered the importance of dividends in India.…”

Section: Introductionmentioning

confidence: 99%

Changing dividend payout behavior and predicting dividend policy in emerging markets: Evidence from India

Kumar,

Sinha

2024

Investment Management and Financial Innovations

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Dividends have become increasingly important for capital market participants to achieve financial goals in the rapidly changing Indian economy. This study aims to simplify the evolving Indian dividend puzzle by analyzing the dividend trends, examining the evolving nature of firm and macroeconomic determinants of dividends, and developing a dividend policy prediction model. Dividend trends of 3,162 non-financial listed Indian firms from 2006–2022 are studied to gain insights about the Indian dividend puzzle. Regularization and logit models are used to explore the nature of impact of important dividend determinants. Data-mining methods are employed to build a robust model for dividend policy prediction. Trend analysis reveals a decline in the quantum of dividends and proportion of dividend-paying firms with approximately 90% of the dividend-payers belonging to the manufacturing and service sector. Further findings suggest that size, age, maturity, profitability, past dividends, earnings, and bank monitoring of firms had a favorable impact on the likelihood of dividend payments. Macroeconomic indicators such as GDP growth rate, repo rate, percentage change in equity issues, listings, gross fixed assets formation also had a positive impact. The annual percentage change in debt issues and new project announcements at the macro level with investment prospects at firm level negatively impacted dividends. Dividend prediction model based on the random forest technique achieved the highest prediction accuracy of 90.77% and 77.31% under binomial and multi-class situations. These findings are expected to help corporate executives, portfolio managers and investors proactively design optimal dividend policies and formulate their investment strategies.

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Does Information Asymmetry Affect Dividend Policy? Analysis Using Market Microstructure Variables

Cited by 6 publications

References 44 publications

Design of Social Responsibility Incentive Contracts for Stakeholders of Megaprojects under Information Asymmetry

Design of Social Responsibility Incentive Contracts for Stakeholders of Megaprojects under Information Asymmetry

Dividend and investment decisions in asymmetric information environments: evidence from the restaurant industry

Changing dividend payout behavior and predicting dividend policy in emerging markets: Evidence from India

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