Impact of market classifications on the innovative use of financing and dividend techniques: a global review of survey papers

Abstract

Purpose This study aims to investigate the belief that the innovative/skilled use of financing and dividend policy decision techniques depends on the firm’s host market classifications (frontier, emerging and developed markets). Design/methodology/approach Using survey studies with similar questions, the authors reviewed, tallied and compared firm characteristic subgroup mean values of 2.4 and above (≥ 60% usage rate) per technique per market classification for the financing decisions analysis. In the dividend policy analysis, the authors tabulated existing rank results per market classification. Findings Managers in Malaysia significantly issue stock based on whether the firm's recent profits have been sufficient to fund their activities; this technique is of low value to US and Ghanaian managers. Managers in Ghana significantly limit their debt so their customers/suppliers are not worried about the firm going out of business; this technique has low value for Malaysian and US managers. Managers in Malaysia significantly issue debt when it gives investors a better impression of their firm prospects than issuing stock; this technique is not valuable to Ghanaian and US managers. On dividends, Ghanaian and sanctioned Iranian managers significantly consider cash availability before a dividend decision; this has low value to emerging and developed market managers. Practical implications These findings suggest that managers must customise their sets of valuable financing and dividend techniques to reflect the business risks and hurdles per their firm’s host market classification – as markets may determine a technique’s usefulness. Also, the innovative/skilful use of financing and dividend techniques decreases as managers move from developed to frontier markets, possibly due to degrading market conditions. Originality/value A global comparative study of survey literature covering frontier, emerging and developed markets is rare in the literature.