Geographic Variation in Religiosity and Its Impact of Dividend Policies

Farooq, Omar; Bakhadirov, Mukhammadfoik; Ahmed, Neveen

doi:10.21315/aamjaf2020.16.1.6

Cited by 3 publications

(3 citation statements)

References 6 publications

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“…The use of the median for grouping observations in the sample follows previous studies (e.g. Eyring & Narayanan, 2018;Farooq et al, 2020;Hossain & Nguyen, 2016;Prabowo et al, 2018). The use of LPDT is similar to Blaylock et al (2012) in measuring LPBTD.…”

Section: Methodsmentioning

confidence: 99%

Earnings and Firm Value: The Moderating Impact of Large Deferred Taxes and Large Accruals in Indonesia

Sutopo

Adiati

Siddi

2021

Business: Theory and Practice

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Deferred tax and accruals have the characteristic of causing reported earnings to be above or below normal. Both are permitted to be used by companies in financial reporting. This study examines whether large deferred taxes and large accruals have an impact on the relationship between earnings and firm value. Using a sample that includes 1938 company-year observations for the 2007−2017 periods listed on the Indonesia Stock Exchange (IDX), this study found that large positive deferred taxes with large positive accruals had weakened the relationship between earnings and firm value. In contrast to these results, a large negative deferred tax with a large negative accrual does not have an impact on the relationship between earnings and the firm value. This finding suggests that “liberal” accounting policies that cause reported “above normal” earnings have a negative effect on the association between earnings and firm value. However, “below normal” earnings resulting from “conservative” accounting policies do not affect the association between earnings and firm value. The uniqueness of this study is the incorporation of deferred taxes with accruals with variations in the form of positive versus negative and large versus small. The findings imply that the presentation of financial information with small deferred taxes and small accruals is more beneficial for investors compared to financial information with large positive deferred taxes and large positive accruals. However, results of this study indicate that large negative deferred taxes and large negative accruals, indicating conservative accounting, are not responded differently by investors.

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Section: Methodsmentioning

confidence: 99%

Earnings and Firm Value: The Moderating Impact of Large Deferred Taxes and Large Accruals in Indonesia

Sutopo

Adiati

Siddi

2021

Business: Theory and Practice

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“…Individuals and regions with 'less trust' will appreciate shares and stocks with dividends. Contrary to Kelly (2013), Farooq et al (2020) stated that firms headquartered in states with a high level of religiosity will pay higher dividends. Qin et al (2022) show a negative relationship between trust, corporate governance and dividends.…”

Section: Introductionmentioning

confidence: 94%

Importance of Dividends to Millennial Investors in Indonesian Capital Markets

Asnawi

Siagian

Alzah

et al. 2022

j. Organisasi dan manaj.

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Purpose – This investigation focuses on investors’ interest in cash dividends. In investing selections, dividends are often disregarded, but research on this subject tends to focus on the fundamental variables. Methodology – A questionnaire was submitted to investors on the IDX in October 2021, and 248 data were obtained. The impact of various investor characters, social media and ownership of rumor stocks on the cash dividend were also proposed using logistic regression and multinomial logistic regression. Findings – Except for Genes, none of the other characters indicates an association with/not considering dividends. Only social media variables significantly affect the chances of investors considering dividends. Furthermore, investor experience, risk character and rumor-share ownership variables provide an opportunity to consider dividends below 50%. The results showed that (a) investors who do not follow social media would use cash to buy dividend shares instead of cash withdrawn; (b) Millennials buy other stocks instead of dividend-share; (c) Investors who own rumor stocks will withdraw and purchase others instead of dividend-share. This is because dividends are not considered as an investment strategy. Originality – This study gives (a) a risk-based explanation for investor decisions; (b) behavioral finance research on dividend investing.

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“…So, they invest less in R&D activities. Farooq (2020) mentioned that religious firms are more at risk averse, so they prefer to pay dividends rather than invest. For this reason, investors appreciate this behavior and they reward the risk aversion of religious firms with a positive stock market reaction.…”

Section: Introductionmentioning

confidence: 99%

Religiosity, financial distress and R&D accounting treatment in US context

Gharbi,

Hamed-Sidhom,

Hussainey

2023

JAAR

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PurposePrior research shows that religiosity affects the degree of managers' risk aversion. As a result, religious firms are less likely to invest in R&D activities. Moreover, US GAAP treats these investments as expenses. For this reason, religious firms have fewer expenses in their earnings and are less likely to be in financial distress.Design/methodology/approachData are collected from Worldscope and the Churches and Church Membership files of the American Religion Data Archive website from 1985 to 2018. With 18,199 observations in US context, the authors used the marginal effect to test the mediating effect of R&D accounting treatment.FindingsThe authors find that the marginal effect of religiosity on financial distress with US GAAP is higher than the marginal effect of religiosity on financial distress with capitalization of R&D costs, which means that accounting treatment can explain the relation between religiosity and financial distress in the US context.Research limitations/implicationsThe authors used linear interpolation and linear extrapolation data to be able to conduct this research over a period of 1985–2018. For future researches, the authors propose to test other factors which can explain the relationship between religiosity and financial distress based on the ethics element.Practical implicationsThese results should be of interest to regulators because treating R&D activities as expenses can destroy the accounting performance of firms that prefer investing in risky projects. This favoritism prevents the comparison between two firms in the same industry with different risk-taking behaviors. This problem is more prevalent if the authors have two firms with different ratios of religiosity. This paper suffers from a major limitation related to data availability.Originality/valueThis may be the first study that investigates why religious firms are less likely to be in financial distress. This paper notes that religious firms are less likely to be in financial distress because their conservative behavior towards R&D activities coincides with the conservative R&D accounting treatment. In fact, the mismatch between expenses and revenues from R&D activities can cause financial distress.

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Geographic Variation in Religiosity and Its Impact of Dividend Policies

Cited by 3 publications

References 6 publications

Earnings and Firm Value: The Moderating Impact of Large Deferred Taxes and Large Accruals in Indonesia

Earnings and Firm Value: The Moderating Impact of Large Deferred Taxes and Large Accruals in Indonesia

Importance of Dividends to Millennial Investors in Indonesian Capital Markets

Religiosity, financial distress and R&D accounting treatment in US context

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