Relevance of Signaling and Smoothing Approaches to Dividend: A Study of Indian IT Sector

Anil, Kanwal; Kapoor, Sujata

doi:10.1177/097324700800400410

Cited by 5 publications

(6 citation statements)

References 2 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Most important antecedent of dividend is future and its unpredictability. Future uncertainty has real repercussions for behavior of market agents (Bernanke, 1983; Bloom, 2009; Bloom et al, 2007). State policymakers might add second layer of uncertainty including fiscal, monetary policy, or regulations termed as economic policy uncertainty (EPU) (Figure 1).…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of economic policy uncertainty on dividend decision: A moderating role of board financial expertise

Sarwar

Hassan

2021

Journal of Public Affairs

View full text Add to dashboard Cite

Increased competition in the world of emerging financial markets has highlighted the need for more strategic and far‐sighted decisions. Living in a constrained economy investor has always been sensitive about the dividend patterns offered by the firm. Current study focuses on the moderating role of board financial expertise (BFE) on dividend decision of the firm during economic policy uncertainty (EPU), by taking data for 517 nonfinancial listed firms from year 2007–2015. Study presents its empirical model in two forms based on dividend initiation (Di) by nondividend payer firms and dividend termination (Dt) by already dividend paying firms during EPU. Logit model was employed to access the effect of explanatory variables on the probability of terminating the dividend by dividend payers and probability of initiating the dividend by nondividend payers during EPU. The results indicate that firms terminate dividend at the time of uncertainty, but when BFE was introduced as a moderator, previously nonpayer firms initiate dividend and previously payer firms sustain dividends payments at the time of EPU that remains robust with the inclusion of additional CEO level and corporate governance variables. Study further confirms during the EPU, dividend decisions in turn significantly affect firm value as supported by expectancy theory. Results suggest that BFE can be an important signal for keen market participants in deciding future dimensions of a firm.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Impact of economic policy uncertainty on dividend decision: A moderating role of board financial expertise

Sarwar

Hassan

2021

Journal of Public Affairs

View full text Add to dashboard Cite

show abstract

“…As mentioned in the work of Aniland Kapoor (2008), there is a consensus that a single factor cannot explain the behavior of the dividend. For this reason, financial researchers determined some factors specific to company in terms of taking dividend decisions (including the ownership structure).The first of these factors proposed for dividend decisions is the problem of information asymmetry between executives and shareholders associated with imperfect capital markets.…”

Section: Introductionmentioning

confidence: 99%

The Relationship between Ownership Structure and Dividend: An Application in Istanbul Stock Exchange

Sakınç¹,

Gungor²

2015

JEDS

View full text Add to dashboard Cite

This study defines the ownership structures of 271 real and banking sectors companies registered in the Istanbul Stock Exchange between 2004-2011 years and the impact of ownership structure on dividend was determined by panel data analysis. According to the results of the analysis, it has been observed that the largest shareholder has about 45.37 percent of the shares. Therefore, it has been concluded that companies in the real and banking sector has mostly concentrated ownership structure. Ownership structure is described with two main sub-variables: ownership concentration and ownership composition. It is determined that increase in the concentration of ownership increases the proportion of cash dividend. As the free float rate increases, dividend payout ratio decreases. A negative relationship was found out between the foreign ownership of ownership composition variables and dividend payout ratio. This result is statistically significant. Accordingly, the more is the ratio of the foreign ownership, the less is the dividend rate. In addition, increase in the ratio of managerial ownership decreases dividend payout ratio. However, this result is not statistically significant.

show abstract

“…Therefore, the insignificance of debt to change in payout ratio suggests that to maintain dividend recurrence, managers do not rely on debt for reducing the creditors' control over dividend payments than debt obligations. Since the dividend is paid in cash, the propensity to increase payout is dependent on the liquidity position of the firm (Anil & Kapoor, 2008;Kato et al, 2002). Finally, this study asserts that firms with an established track record of dividend pay-ments can decrease their investments to initiate higher dividend payments.…”

Section: Discussionmentioning

confidence: 72%

“…Since the dividend is paid in cash, a firm's cash position can be assessed through liquidity. Hence, liquidity has been associated with dividend policy (Anil & Kapoor, 2008;Deshmukh, 2003;Kato et al, 2002). The quick ratio is considered a proxy for liquidity.…”

Section: Liquiditymentioning

confidence: 99%

Managerial remuneration and payout policy: evidence from Indian Regular payers

Das

Kar

Jena

2021

Investment Management and Financial Innovations

View full text Add to dashboard Cite

This study attempts to examine the role of managers in the associated agency theory on dividend policy decisions for firms that do not skip dividend payments. This research sample considered the firms that are listed on the Bombay Stock Exchange (BSE) and pay regular dividends on an annual basis from the financial year 2011 to 2020. Panel data econometric tools and robustness tests were carried out for model validation.The study results show that there is a higher positive relationship between change in payout ratio and managerial remuneration. Similarly, there is a large positive significance to increase manager incentive for regular payer firms with greater promoter control in higher dividend payout. Thus, this brings an agency theory perspective of rewarding well to managers to increase promoter wealth. Hence, policymakers can contemplate these findings to analyze the nexus between managers and promoters in the dividend policy of firms that never skip their dividend payments.

show abstract

Relevance of Signaling and Smoothing Approaches to Dividend: A Study of Indian IT Sector

Cited by 5 publications

References 2 publications

Impact of economic policy uncertainty on dividend decision: A moderating role of board financial expertise

Impact of economic policy uncertainty on dividend decision: A moderating role of board financial expertise

The Relationship between Ownership Structure and Dividend: An Application in Istanbul Stock Exchange

Managerial remuneration and payout policy: evidence from Indian Regular payers

Contact Info

Product

Resources

About