Revisiting the Effect of Dividend Policy on Firm Performance and Value: Empirical Evidence from the Korean Market

Njoku, Okechukwu Enyeribe; Lee, Younghwan

doi:10.3390/ijfs12010022

Cited by 2 publications

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The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

Arhinful,

Mensah,

Amin

et al. 2024

Futur Bus J

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Non-financial companies listed on the Frankfurt Stock Exchange face considerable difficulties due to expensive funding and the need to make complex decisions about their capital structure. These problems impact their judgments about dividend policy, resulting in ambiguity and possible inefficiency. This study draws on the bird-in-hand theory to investigate the influence of the cost of capital on dividend policy decisions among non-financial firms listed on the Frankfurt Stock Exchange, focusing on 227 companies from 2005 to 2022. The data for this study were sourced from Thomson Reuters Datastream. Employing the common shock autoregressive distributed lag (CS-ARDL) and two-step generalized method of moments (GMM) estimations, findings reveal that the cost of debt consistently negatively impacts dividend payouts and coverage ratios. In contrast, the cost of equity has an insignificant effect. Conversely, the weighted average cost of capital positively influences dividend payouts and coverage ratios but negatively influences dividend yield. All the findings supported the bird-in-hand theory except for the negative impact of WACC on dividend yield. These insights highlight the importance of considering the cost of capital and market share dynamics in dividend policy formulation. Firms should prioritize efficient debt management to sustain dividend distributions, and aligning dividend policies with overall capital structure management is crucial in this regard, providing a sense of reassurance and confidence to the firms and their stakeholders. This study provides valuable guidance for financial decision-makers navigating dividend-related strategies within corporate environments.

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The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

Arhinful,

Mensah,

Amin

et al. 2024

Futur Bus J

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Assessment of the Level of Financial Risk Associated with the Market Activity of a Public Company, with a Neutral Approach to Its Dividend Policy

Krylov

2024

Preprint

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The purpose of this article is to study the theoretical and practical aspects of assessing the level of financial risk of a public company associated with its activity on the stock market (market activity) depending on the main determining factors in the context of a neutral approach to dividend policy, by analyzing the sensitivity of key indicators of the activity of a public company on the stock market to these factors, allowing for the interests of all other stakeholders interested in the activities of the public company (including potential investors) to be taken into account in order to ensure its sustainable development, which involves approximately equal distribution of this financial risk between them, in the long term. The methodological basis of the study was the concept of a neutral approach to the dividend policy of a public company and the concept of sensitivity analysis. The motivation for the study is to ensure the development, justification and effective management of the financial risk of a public company associated with its market activity depending on the main determining factors in the context of a neutral approach to dividend policy, to ensure the interests of its main stakeholders by constructing elasticity models of key indicators of market activity by the main determining factors, allowing to assess the level of financial risk associated with these factors. The author concludes that the elasticity models of key indicators of a public company's activity on the stock market by the main determining factors developed by him are a fairly effective tool for assessing the level of financial risk caused by the degree of market activity of a public company under conditions of a neutral approach to the implementation of its dividend policy. JEL codes: C15, G32, G34, G35 MSC codes: 91G50, 91G70, 91G80

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Revisiting the Effect of Dividend Policy on Firm Performance and Value: Empirical Evidence from the Korean Market

Cited by 2 publications

References 50 publications

The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

Assessment of the Level of Financial Risk Associated with the Market Activity of a Public Company, with a Neutral Approach to Its Dividend Policy

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