Stock liquidity, agency cost, and dividend payouts

Hu, Yi; Huang, Weiwei; Chen, Zihao

doi:10.1080/13504851.2019.1616052

Cited by 10 publications

(10 citation statements)

References 8 publications

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“…This negative relationship for the US firms is due to active shareholders' monitoring mechanism, effective regulations, less gap of information asymmetries as well as due to the occurrence of the global turbulence in economic conditions over our sample period, such as the GFC, the pandemic diseases in 2010-2011 (H1N1 and Bird flu) (Al-Shboul et al, 2021) and the oil crash crisis between 2014 and 2016 (Al-Shboul and Alsharari, 2019). However, our findings contradict the results of other studies (Herlambang et al, 2017;Faradisi and Ulpah, 2021;Jiang et al, 2017;Nguyen, 2020;Hu et al, 2020) who used datasets from different countries (China, Indonesia and Australia). The difference between our results and the findings of these studies would be due to the following conditions govern firms in other countries, such as the absence of effective shareholders' monitoring policies, creditors substitute hypothesis, ineffective stock trading regulations and the lack of governance as insiders might exerts holding back the cash flows for their own benefits.…”

Section: Discussioncontrasting

confidence: 99%

“…, 2017; Faradisi and Ulpah, 2021; Jiang et al. , 2017; Nguyen, 2020; Hu et al. , 2020) who used datasets from different countries (China, Indonesia and Australia).…”

Section: Discussionmentioning

confidence: 99%

“…Jiang et al (2017) and Nguyen (2020) argued that dividend and stock liquidity are positively related for a sample of the Ashare listed Chinese companies and Australian firms, respectively. Hu et al (2020) argued that higher stock liquidity leads to an increase in dividend payouts throughout the creditors substitute hypothesis.…”

Section: Literature Review 21 Dividend Payouts and Stock Liquiditymentioning

confidence: 99%

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Dividend policy, its asymmetric behavior and stock liquidity

Taher

Al-Shboul

2022

JES

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PurposeThis paper examines the impact of dividend policy on stock market liquidity, and whether the dividend payouts has an asymmetric effect on stock liquidity.Design/methodology/approachA multivariate panel-data regression analysis is conducted for a sample of the largest 411 nonfinancial US firms. Three main hypothesis are tested: (1) whether dividend payouts impact affect stock liquidity, (2) whether low and high dividend payments can asymmetrically effect on stock liquidity and (3) whether the presence of the GFC has an impact the relationship between dividend payments and stock liquidity.FindingsThe study finds that dividend policy is adversely associated with stock liquidity. This supports the prediction of the liquidity-dividend hypothesis. The authors also report that stock liquidity asymmetrically responds to changes in dividend payouts, confirming the prediction of the dividend-signaling approach. More specifically, higher dividend payments decrease stock liquidity by a lower magnitude than the increase in stock liquidity resulting from lower dividend payments. Finally, the presence of the GFC weakened the relationship between dividend payments and stock liquidity.Research limitations/implicationsThe paper can help in performing future research by using different dataset covering the COVID-19 crisis.Practical implicationsThe paper allows market participants to better understand the impact of dividend policy and its asymmetric effects on stock liquidity. The authors’ analyses can direct investors and regulators to adopt new supervisory devices to create an appropriate level of dividend payouts that helps to effectively support the level of stock liquidity.Social implicationsThe paper intends to support the business community and to make strong contributions to the economic development and the welfare of the community.Originality/valueThe originality comes from its new evidence as it can help in assessing the importance of dividend policy and its asymmetric impact on stock liquidity in the full sample and during the GFC. The paper is helpful in performing future analyses using a new sample period for another set of data as well as accounting for COVID-19 pandemic crisis.

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Section: Discussioncontrasting

confidence: 99%

“…, 2017; Faradisi and Ulpah, 2021; Jiang et al. , 2017; Nguyen, 2020; Hu et al. , 2020) who used datasets from different countries (China, Indonesia and Australia).…”

Section: Discussionmentioning

confidence: 99%

Section: Literature Review 21 Dividend Payouts and Stock Liquiditymentioning

confidence: 99%

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Dividend policy, its asymmetric behavior and stock liquidity

Taher

Al-Shboul

2022

JES

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“…Suatu perusahaan dalam menjalankan kegiatan operasionalnya, melakukan agency relationship yaitu hubungan antara principal (pemegang saham) yang mencari agent yaitu manajer untuk memenuhi kebutuhannya dalam menjalankan perusahaan. Agency problem muncul ketika agent bertindak tidak sesuai dengan kepentingan atau keinginan principal yang menyebabkan adanya konflik kepentingan (conflict of interest) (Easterbrook, 1984, Hu et al, 2020. Agency problem juga terjadi karena adanya perbedaan kepentingan antara principal dan manajemen mengenai laba perusahaan.…”

Section: Pendahuluanunclassified

“…Masalah keagenan dapat dikurangi dengan mekanisme pembayaran dividen, yaitu dengan memperbesar proporsi pembayaran dividen dari laba perusahaan untuk stockholders (Jensen & Meckling, 1976;D'Souza & Saxena, 1999;Hailin & Jingxu, 2019;Omokhudu & Toluwa, 2018;Hu et al, 2020). Kebijakan dividen merupakan penetapan berapa besarnya dividen atau bagian keuntungan yang akan dibagikan sebagai dividen dan berapa yang sebaiknya ditahan di perusahaan untuk memenuhi kebutuhan dana oleh perusahaan (Sugeng, 2017).…”

Section: Pendahuluanunclassified

Agency Cost dan Kebijakan Dividen (Studi pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia)

Lailiyah

Abadi

2021

JAB

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Manufacturing companies in Indonesia are large-scale companies and dominate the Indonesia Stock Exchange. The number of companies listed on the stock exchange is increase every year, which results in more people having the opportunity to own a company. The spread of more investors who own the company makes conflict between owners even higher. The purpose of this study is to determine the effect of agency cost proxied by insider ownership, dispersion of ownership, free cash flow, and collateralizable assets on dividend policies of manufacturing companies in Indonesia. Data in the form of secondary data in the form of financial reports and annual reports for the period 2012-2019. The data used multiple linear regression statistical analysis techniques. The results of this study show that agency cost, which is proxied by dispersion ownership, free cash flow and collateralizable assets, has a positive effect on dividend policy. A firm in its operational activities, carries out agency relationships. Agency problems arise when an agent acts not in accordance with the principal's interests, which causes a conflict of interest between the principal and agent. Agency problems will increase agency cost. The agency problem can be reduced by the dividend payment mechanism, namely by increasing the proportion of dividend payments from company profits for stockholders. In contrast to insider ownership which does not affect dividend decisions because the percentage of company ownership owned by insiders is limited in Indonesia.

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Does brand capital improve stock liquidity? Evidence from China

Majeed,

Ullah,

Tariq

et al. 2023

Int. J Fin Econ

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This study investigates how brand capital affects stock market liquidity. We posit that brand capital improves the corporate information environment, enhances competitiveness, and increases firm visibility ultimately resulting in higher stock liquidity. Using a sample of Chinese listed firms, we find a positive relationship between brand capital and stock liquidity. Further analyses show that the effect of brand capital is more pronounced for firms with low media coverage and analyst following. Moreover, the effect of brand capital on stock liquidity is significant for non‐state‐owned enterprises. Our mechanism analyses also confirm that brand capital plays an informational role by effectively mitigating information asymmetry and adverse selection, leading to higher stock liquidity. Our study provides the first evidence of the nexus between brand capital and stock liquidity and extends the literature on the capital market implications of brand capital.

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Stock liquidity, agency cost, and dividend payouts

Cited by 10 publications

References 8 publications

Dividend policy, its asymmetric behavior and stock liquidity

Dividend policy, its asymmetric behavior and stock liquidity

Agency Cost dan Kebijakan Dividen (Studi pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia)

Does brand capital improve stock liquidity? Evidence from China

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