Value of dividend signaling in uncertain times

Baker, H. Kent; Chang, Millicent; Ho, Choy Yeing (Chloe)

doi:10.1111/irfi.12334

Cited by 4 publications

(3 citation statements)

References 62 publications

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“…Attig et al (2021) observed that economic policy uncertainty affecting the economic environment is directly associated with dividend payment. Baker et al (2021) proved that firms distribute higher dividends when there is uncertainty due to government policies. On the contrary, Ali (2022) stated that firms try to maintain a stable dividend payout during the crisis period.…”

Section: Contingent Liabilitiesmentioning

confidence: 99%

Do contingent liabilities affect dividend decisions?

Chaklader,

Mundi

2023

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PurposeThe paper examines contingent liabilities' effect on the firm's dividend decisions.Design/methodology/approachFixed-effects regression and logit model results estimate the influence of contingent liabilities on firms' dividend decisions using a sample of 2,288 firm-year observations of S&P 500 firms from 2012 until 2022. Robustness checks and results from the 2SLS model further support the authors’ findings.FindingsThe results show that contingent liabilities negatively affect dividend payment decisions. This analysis further demonstrates that the stated effect of contingent liabilities on dividend decisions is more substantial for firms with financing deficits and those with above-industry-average corporate governance scores.Research limitations/implicationsThere needs to be more systematic conceptual reason for measuring uncertainty for firms and its influence on dividend decisions. Future research should use other measures of firm uncertainty to examine the relation of the firm's uncertainty with dividend decisions.Practical implicationsThe authors suggest that contingent liabilities create uncertainty for future cash flows, influence a firm's agency costs and provide credible signals on a firm's prospects to the market. The findings support existing literature that measurable firm-specific variables significantly influence a firm's dividend decisions. The results are robust for an alternative explanation.Originality/valueBy investigating the impact of the influence of contingent liabilities on dividends, the authors extend research on dividend decisions and attempt to provide insights into a firm's dividend decisions by incorporating an off-the-balance sheet item (contingent liabilities) as a significant predictor for dividend decisions.

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Section: Contingent Liabilitiesmentioning

confidence: 99%

Do contingent liabilities affect dividend decisions?

Chaklader,

Mundi

2023

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“…Kato, Loewenstein [14]; Baker et al [15] Positive effect This outcome can be explained by the theory of preference for dividends, or commonly known as the Bird-in-the-Hand theory.…”

Section: Authors Effect Commentsmentioning

confidence: 99%

Stock Market Reaction to Dividend Announcements: Evidence from the Russian Market

Назарова,

Исаева,

Чуприна

2023

КФ

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The inquiry into the influence of dividend declarations on the stock values of corporations has been extensively investigated across various countries. The results of these studies have been varied, and there is limited information available on this topic specifically for the Russian market. This paper aims to demonstrate the impact of dividend announcements on the yield of Russian companies' shares. The study utilizes comprehensive data from MOEX for the period of 2008–2021, which encompasses both economic growth and recessionary periods. The results of the study indicate that the effect of decreasing, maintaining and increasing the amount of dividends corresponds to the signal theory. There are differences betweenindustries: there are fairly stable and mature companies on the market that are not subject to significant changes (Electric Power, Oil and Gas industries); shares of companies in the Transport industry and a number of other industries behave more distinctively. In comparison with other studies, this paper analyzes the effect of increasing and decreasing dividends on stock returns using not only event analysis, but also regression analysis. This work adds results to the few available on the Russian market.The main limitations include the small number of variables in the construction of regression models and the limited period of the study. The work is carried out only for the Russian market. The obtained findings can be taken into account by company managers in order to make optimal decisions regarding the dividend policy and enhancing their dividend policies.

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“…Investors respond more favorably to dividends when in times of uncertainty. Information about paying dividends is a signal for firm quality [3].…”

Section: The Information In Dividend Announcementmentioning

confidence: 99%

Stock Price Behaviour around the Announcement Date of Cash Dividend on the Indonesia Stock Exchange

Mujilan

2022

jak

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This study aims to explain the stock prices behavior around the announcement date of cash dividends. The study compares the stock prices a week before the cumulative date, cumulative date, record date, a week after the record date, and two weeks after the record date. The stock prices are also compared to the cash dividends nominals in 2017 and cash dividends in 2018. The researcher obtains the research data from LQ45 companies in 2018. The data is tested using the Wilcoxon Signed-Ranks Test. The results show that the date of announcement and recording of dividends do not have an impact on the increase in stock prices, but the result shows a decline in stock prices. The results of this study imply that the announcement of cash dividends does not trigger stock buying action around the announcement date for the companies who distribute cash dividends.

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Value of dividend signaling in uncertain times

Cited by 4 publications

References 62 publications

Do contingent liabilities affect dividend decisions?

Do contingent liabilities affect dividend decisions?

Stock Market Reaction to Dividend Announcements: Evidence from the Russian Market

Stock Price Behaviour around the Announcement Date of Cash Dividend on the Indonesia Stock Exchange

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