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This study aims to determine whether companies with surpluses are more capable of maintaining their dividend rate if they issue cash dividends from capital reserves. Further, it considers whether s...

This study places Dubofsky’s (1992) “limit order adjustment hypothesis” under the microscope of an intraday analysis, which employs a minute-by-minute trade and quote data recorded during the ex-dividend days of common stocks listed on NYSE, AMEX and NASDAQ. Dufosky’s (1992) model concluded that the asymmetric adjustment of open limit orders for cash dividend payments under the NYSE and AMEX rules is sufficient to create abnormal returns on the ex-dividend day. Empirical evidence shows that the limit order bias incurred due to the asymmetric adjustment of open limit orders seems to dominate the overnight ex-day returns but at the same time, it is significantly corrected via active trading up until the close of the ex- dividend day. As a result, the significant association of the ex-day price drop discrepancy with the opening limit order bias eventually disappears before the ex-dividend day close. Finally, it is found that the reversal of the limit order bias is in fact quicker in stocks which are more liquid or listed on NASDAQ where strong competition among dealers is envisaged to drive stale quotes closer to the fair adjustment of the dividend.

Dividends are distributed to shareholders as earning after tax from company profit.The amount or percentage of profit taht a company will pay to shareholders as cash dividends is called the dividend payout ratio. The size of the dividend distributed by a company depends on the dividend plicy of the company, so it is necesarry to consider the comapny regarding the factors tha influence the dividend policy. The sample in this study was 34 manufacturing companies listed on the Indonesia Stock Exchange in 2015-2018.Determination of the sample using purposive sampling method. The analytical tool used is mutiple linear regression analysis. The result of the study using the t test showed that CR, DER, and investment had no significant effect on the dividend payout ratio, whereas ROE, had a positive ad significant effect on the dividend payout ratio. And company growth has negative effect on dividend payout ratio

Our paper reveals that family-controlled firms pay less cash dividends than non-family-controlled firms in Taiwan, which differs from moderating proxy problems by increasing dividend payouts due to reduced free cash flow. These family-controlled firms might not be regarded as a problem due to the improved corporate governance and high firm value in Taiwan, which is contrary to relevant studies. Dividend payouts for family-controlled firms in the West and East, such as asset allocation, might be affected by various factors, including culture, nationality, and philosophy, which are seldom considered deliberately in existing literature.

This study examines the impact of import competition on a firm's preference for financial flexibility by examining corporate payout policy. We confirm existing results that firms with greater exposure to import competition are less likely to pay regular dividends and pay less. We extend these results by showing that firms subject to greater import competition are less likely to initiate or increase regular cash dividends, and are more likely to decrease or omit them. Further, we are the first to show that for firms that have a positive cash payout there is a clear preference for the flexible distribution channel when faced with more intense import competition.

Cash dividend is one form of return expected by shareholders. But on the other side, cash dividend is an expense for the company. This conflict of interest is a factor affecting the company in determine the amount of cash dividends. So, the researcher conducting research which aims to test and analyze the influence of Current Ratio, Net Profit Margin, Debt to Equity Ratio, EPS, Free Cash Flow, and Previous Year Dividend to Cash Dividend paid by company. The sample used in this reasearch is manufacturing company listed on the Indonesia Stock Exchange (BEI) in 2014 to 2016. After sampling the results showed there are 17 companies that can be sampled with a period of three years. So the total sample in this research are 51 samples. The result of this research shows that (1) Current Ratio has positive effect to Cash Dividend, (2) Net Profit Margin has no effect to Cash Dividend, (3) Debt to Equity Ratio has no effect to Cash Dividend, (4) EPS has positive effect to Cash Dividend , (5) Free Cash Flow has no effect to Cash Dividend, (6) Previous Year Dividend has no effect to Cash Dividend.

Stocks that initiate dividends tend to comove more with other dividend-paying stocks and comove less with non-dividend payers. This is also true for: (a) dividend initiations that are motivated by the exogenous 2003 dividend tax cut; and (b) the cash dividend share class of Citizens Utilities (relative to its stock dividend class). We find that flows to dividend prone (averse) mutual funds increase the comovement among dividend-paying (non-dividend paying) stocks. Overall, the evidence supports the proposition that the trading of pro-dividend (dividend-averse) clienteles induces an extra factor in dividend payers (non-payers), beyond those associated with changes in common factors.

We provide new evidence on price disparity between Chinese A- and H-shares for cross-listed companies in the period 2006–2019. Our panel-data results show that the A-share price premium is negatively related to cash dividends and expected relative currency values between mainland China and Hong Kong. International investors in H-shares prefer companies that pay dividends regularly, and they buy when the Chinese currency is expected to appreciate. A discounted dividend theoretical model explains these results.

There is no exact closed form formula for pricing of European options with discrete cash dividends under the model where the underlying asset price follows a piecewise lognormal process with jumps at dividend ex-dates. This paper presents alternative expansions based on the technique of Etore and Gobet, leading to more robust first, second and third order expansions accross the range of strikes and the range of dividend dates.

Dividend distribution is the core of financial management of listed companies and an important way for investors to obtain returns. This paper examines the influence of macro monetary policy and micro financing constraints on cash dividend payment by taking a-share profit listed companies in Shanghai from 2008 to 2012 as samples. The findings are as follows :(1) tight monetary policy inhibits the payment of cash dividends; (2) Non-state and non-eastern companies pay fewer cash dividends under tighter monetary policy.

Purpose The purpose of this paper is to develop and validate new robust measures of investors’ preference for the form of regular corporate payout. Then, the paper adds to the empirical evidence on catering theory by examining managers’ catering to such preference. Design/methodology/approach The authors use the matching method to control for firm characteristics. The authors apply two robustness tests to validate the measures. The authors use the rigorous multivariate analysis. Findings US investors’ preference for regular dividends vs regular stock repurchases, being different forms of corporate payout, varies over time. Managers cater to investors’ preference for payout form. The findings are consistent with the catering theory of Baker and Wurgler (2004a). The number of firms that pay cash dividends regularly continue to outnumber the ones that purchase their shares regularly. Research limitations/implications The study only uses US data. It does not cover other countries. Practical implications The measures can be used in several future research endeavors, such as examining investors’ payout-form preferences in other countries (see Booth and Zhou, 2017) and exploring their determinants, the corporate governance characteristics of firms that cater to investors’ preference vs firms that do not, etc. Social implications The study contributes to understanding investors’ preferences and corporate payout behavior which is prerequisite to efficient policy formulation. Originality/value The proxies for investors’ payout-form preference control for firm characteristics and are unrelated to investors’ time-varying risk preferences. Also, they are robust to measurement issues. Moreover, the study covers a period of 40 years.

This study examines the presence of catering for various dividend policies in Taiwanese firms, including cash, stock and dual dividends. Different from prior results in the literature, we find that the catering phenomenon exists for these three types of dividend decisions. When one type of dividend premium (i.e., cash dividend) is high, managers are more likely to issue the same type of dividend and less likely to issue the other type of dividend (i.e., stock dividend). Catering persists even after controlling for the effects of a firm’s characteristics, risk and external policy, as well as macroeconomic situations. JEL Classification: G35, C23

Using a model based on Bhattacharyya (2007), we predict a positive (negative) relationship between the earnings retention ratio (dividend payout ratio) and managerial compensation. We use tobit regression to analyse data for New Zealand firms' dividend payouts over the period 1997–2015 and find results consistent with Bhattacharyya (2007). These results hold when the definition of payout is modified to incorporate both common dividends and common share repurchases. Our results indicate that corporate dividend policy among New Zealand firms is perhaps best understood by considering the dividend payout ratio, rather than the level of, or changes in, cash dividends alone.

Purpose This study aims to examine dividend policy from the perspective of institutional investors in India. It focuses on the level of importance these investors attach to the dividend policy of their investee firms, the level of influence they exercise in shaping such firms’ dividend policies and their reactions to changes in dividends. This study also reports how institutional investors view various explanations for paying dividends. Design/methodology/approach A mail survey provides a profile of respondents and their firms, as well as responses to 29 closed-ended questions involving various explanations for paying dividends and 22 closed-ended questions on various dividend issues. Findings The evidence shows that Indian institutional investors attach substantial importance to dividend policy and prefer high dividend payments. Their reactions to dividend changes are asymmetric. Taxes are a major driver for why they seek dividends, whereas liquidity needs to play little role in shaping their preferences. The two most commonly used methods of active monitoring are selling shares and communicating concerns to investee companies. Research limitations/implications The number of responses limits the ability to test for statistically significant differences between the various competing hypotheses. Practical implications The findings support multiple explanations for paying cash dividends and provide new evidence supporting the positive relation between inflation and dividend payments. Originality/value This study provides the first survey evidence on the views of institutional investors on dividend policy in India.

Using a random sample of US companies affected by a regulatory experiment (i.e. the Regulation SHO adopted by the SEC in 2004), this thesis examines whether the removal of short-selling constraints affects corporate payout decisions. We find that companies pay higher cash dividends but do not repurchase more shares in response to the relaxation of short-selling constraints. The response of increased cash dividends is concentrated in small firms. Our finding is consistent with the literature that paying cash dividends can be used to deter short-selling activities as a more costly and hence a more reliable signal of stock undervaluation than share repurchases. Our result shows that short-selling activity has a causal effect on corporate payout decisions.

Chinese firms experienced a substantial reduction in nontradable shares following the Split-Share Structure Reform that began in 2005. The decrease in nontradable shares, or increase in share tradability, is associated with a decline in the firms’ cash dividend payouts. The positive association is attenuated in firms with fewer financial constraints, only weakly affected by firm governance, and not affected by investment opportunities or controlling shareholder type. The results highlight the fact that firms disgorge cash to compensate shareholders for trading restrictions and conclude that dividends persist when firms have easier access to external financing. These findings are robust to alternative definitions of nontradable shares, after controlling for firm fixed effects and omitted changing firm characteristics.

This study attempts to investigate the stock price reaction to divi-dend announcements using data of Vietnamese listed firms on Hochiminh Stock Exchange (HOSE). Standard event study meth-odology has been employed on a sample of 198 cash dividend an-nouncements made in 2011. The results show that stock prices react significantly and positively to the announcements of cash dividends, including both dividend increasing and dividend decreasing events. It is also plausible that cumulative abnormal returns exhibit an in-creasing trend before announcement yet a decreasing trend after announcement dates. More specifically, we find positively signifi-cant cumulative abnormal returns of around 1.03% on announce-ment dates; other larger windows also demonstrate positive abnor-mal returns of around 1.3%. In addition, cash dividends have differ-ent effects on share prices of firms from different industries. These results support the signaling hypothesis and are also consistent with prior findings of empirical research done on more developed mar-kets, i.e. the US and the UK.

According to a recent survey by McKinsey and Company, the Indian manufacturing sector is expected to touch US$ 1 trillion by 2025.This study analyses the impact of the announcement of cash dividends on the stock price returns of the manufacturing companies listed on Bombay Stock Exchange using event study methodology. Further, it explores whether the US financial crisis recession impacted average abnormal returns (AARs) in the period of study. The empirical results show that cash dividend announcements have positive AARs. Overall, the results lend support to the signalling and informational content hypotheses of dividends. The paired samples t-test indicates a significant difference in the mean values of AARs in the pre-and post-recession phases, highlighting the impact of recession.

The dividend signaling hypothesis means that dividend change announcements send signals to the market about its prospects. Market capitalization anomaly or size effect means small-cap stocks variances and returns are different than the large-cap stocks. The sample was tested for dividend change announcement, and the sample was divided into large, medium, and small sample sizes based on the market capitalization of the stocks to test the size effect. Event methodology market model used to calculate the abnormal returns on the dividend announcement day. We found that dividends send signals to the market, and the market reacts positively to the dividend change announcements on event day (Aharony and Swary 1980, Litzenberger and Ramaswamy 1982, Dhillon and Johnson 1994, Below and Johnson 1996), but results may vary with the size of the company. Small-cap companies' variances are higher than the large-cap and mid-cap companies, and also small-cap variances are not equal to other variances results similar to Wong (1989), Bandara and Samarakoon (2002), Sehgal and Tripathi (2006), and Switzer (2010). Finally, we concluded that the dividend signaling hypothesis and market capitalization or size effect anomaly exist in the Indian stock market

Several recent studies have used option-implied dividends to investigate the term structure of equity. A crucial question is whether these dividend strips need to be adjusted to take into account the difference in taxation between dividends and capital gains. Unlike prior research, we find an option-implied ex-day decline that is less than the cash dividend and of a similar magnitude to the overnight ex-day stock price decline. In addition, we use put-call arbitrage to identify several option mispricing factors. Our method for calculating market expectations of dividends is useful for research topics including dividend policy, analyst forecasts, and asset pricing.

We propose a behavioral dividend clientele view to explain a unique “ex-dividend day” anomaly on the Chinese stock market. In particular, we find that on the ex-dividend day, the average CAPM-adjusted stock return is significantly below zero and the average trading volume significantly shrinks, which are different from the theoretical predictions and existing findings drawn from other stock markets. Such patterns tend to be driven by small retail investors who are net buyers of dividend paying stocks prior to the ex-dividend day and switch to net sellers of on and after the ex-dividend day. Furthermore, we find “dividend price”, the negative deviations of ex-dividend day stock return from zero, is positively associated with dividend yields and the idiosyncratic risks of the underlying stocks. These findings suggest that investors with strong non-monetary and psychologically driven dividend preferences can result in a unique “ex-dividend day” anomaly.

Payout policy is one of the most important policies set by firms and represents a major use of capital by publicly traded corporations. Firms should consider future economic activity and future firm performance when determining payout policy choices, given they are cash outflow commitments from the firm. We empirically examine whether firms use economic outlook when determining payout policy using publicly available data from the Chicago Federal Reserve Bank and Compustat. We find that economic outlook is positively related to firm payout policy. Specifically, we find that firms are more likely to pay out cash dividends and repurchase shares when economic outlook is positive. Furthermore, when examining only firms already paying dividends and/or repurchasing shares, firms pay greater amounts of cash dividends and repurchase more shares when economic outlook is positive. We are the first, to our knowledge, to examine whether firms use economic outlook to determine their payout policy. Our paper motivates future research in corporate finance to examine how firms use economic outlook when making capital planning decisions.

In this paper, principal component analysis is used to weigh the level of corporate governance and an intermediary effect model is built based on the perspective of corporate governance. It is found that the cash dividend payment propensity and payment level of listed companies with venture capital shareholders are significantly higher than that of listed companies without venture capital holdings, and the higher the shareholding ratio of venture capital to listed companies, the higher the cash dividend payment level. The effect of venture investment on cash dividend is realized by improving corporate governance level. The higher the proportion of venture investment in listed companies, the more obvious the improvement of corporate governance is, thereby reducing the agency cost of the company, which is manifested in the improvement of cash dividend payment level of listed companies.

The financial decision is rotated around the dividend decision. The objective is to identify the dividend pattern and the management’ views of dividend policy for revealing the present scenario of dividend practices in the capital market of Bangladesh. The parametric test, non-parametric test and percentile are used for inferring the result. In the manufacturing sector, the miscellaneous sector provides the highest payout. The DPS, EPS, MPS of the large size firm is better than small and medium size firms. The payout of the older firms is more than the newly listed firms. The highest payouts are in medium leveraged firm, low risk’s firm, medium PE ratio’s firm. The survey results reveal that the both shareholders and companies prefer the cash dividend most because of majority shareholders’ expectation. The most of the companies pay cash dividend with stable payout. The majority companies follow increasing trend in dividend payment but there is no satisfactory research to justify the investors’ preference. The capital market related stakeholders should follow these findings.

Firms can use dividends and/or share repurchases to distribute cash to shareholders. Jagannathan, Stephens, and Weisbach (2000) argue that managers tend to use dividends to pay out permanent cash flows and repurchases to pay out temporary cash flows. This paper examines Korean firms’ decisions on their choices between paying out cash flows in the form of dividends or share repurchases. We focus on the permanence of cash flows. To complete this analysis, we decompose cash flows into a transitory component and a permanent one of each firm, employing the approach of Beveridge and Nelson (1981). We find that higher permanent cash flows increase the probability of a dividend increase, while higher temporary cash flows increase the probability of repurchases. And Korean firms tend to choose both dividend change and repurchases when temporary cash flows increase, rather than to choose only repurchases without dividend change. These empirical results show that Korean firms take into consideration of permanence of cash flows in the choice of their payout methods.

This study assesses distorting effect of financial constraints on the inverse relationship between internal and external finance by examining impact of an exogenous financing shock (i.e. a regulation released in China in 2008) on dividend policies in a quasi-natural experimental setting. Our result shows that in the absence of the regulation, the inverse relationship holds. However, the relation is twisted by the 2008 regulation. Compared with unconstrained firms, financially constrained firms are more willing to pay dividends and are more restrained to reduce cash dividends after the regulation, despite the fact that their external financing capacities are further constrained.

Purpose The purpose of this paper is to examine the dividend policy for firms listed on the Taiwan Stock Exchange. The results are consistent with the prediction of the catering theory in that managers choose a dividend policy to cater to the demand of investors. Design/methodology/approach Logistic regressions are used to test the catering theory hypothesis. Findings The results find that the firms distribute more stock dividends than other types of dividends when the dividend premium (DP) for stock dividends is positive. In contrast, firms shift from stock dividends to other types of dividends such as mixed dividends and cash dividends when the DP for stock dividends is negative. Originality/value The marginal contribution of this paper is that the firms change their dividend policy via DP to cater to the demand of investors.

This study examines the cash dividend behaviour of a panel dataset of 1,178 firms traded in the London Stock Exchange (LSE) for the period 2008–2017. Using a modified version of Lintner's (1956) partial adjustment model, it attempts to ascertain whether they follow a stable dividend policy and how the 2008 global financial crisis affects the dividend stability in the UK. The results in general show that LSE firms have long-term payout ratios and slowly adjust their cash dividends to their target as suggested by Lintner. The study findings also detect a negative impact of the financial crisis on dividend payments and a tendency to adjust dividends immediately in response to earnings changes in the first five-year period 2008–2012. More specifically, despite the credit crunch and volatile earnings, UK firms set high payout rates but adopt stable dividend policies with a serious degree of dividend smoothing in early years. When UK-listed firms have a better chance to recover from the initial impact of the crisis, they however set even higher payout rates but distribute much more smoothed cash dividends (exhibiting more stability) over the second five-year period 2013–2017.

Both basic Black–Scholes and plain vanilla binomial models price options on non-dividend-paying stocks. But most stocks pay discrete dividends, and pricing models—especially for American options—must account for that fact, which is not that easy to do without upsetting the price dynamics of the original model. In principle, the value of a stock is the expected present value of its cash payouts out to the infinite future. In this article, the authors develop an approach that greatly simplifies the problem. The future stream of dividends is separated into two parts: those that occur in the immediate future and can be predicted out to some maximum forecasting horizon and the present value of all dividends to be received after that date. The latter is assumed to follow a specified stochastic process. This structure allows available information about near-term dividends to be fully incorporated while maintaining flexibility to use a wide range of processes for the total value due to long-term dividend flow.

Purpose – The purpose of this paper is to survey managers of dividend-paying firms listed on the National Stock Exchange (NSE) in India to learn their views about the factors influencing dividend policy, dividend issues, and explanations for paying cash dividends and repurchasing shares. The authors compare the results to other dividend surveys based on firms in Indonesia, Canada, and the USA. Design/methodology/approach – The authors use questionnaire to gather primary data from a sample of 500 firms listed on the NSE. Findings – The most important determinants of dividends involve earnings (the stability of earnings as well as the level of current and expected future earnings) and the pattern of past dividends. Comparing the overall rankings of the 21 factors by respondents from Indian firms to those of Indonesian, Canadian, and US firms reveals statistically significant correlations. Respondents also perceive that dividend policy affects firm value. Respondents also view maintaining an uninterrupted record of dividends as important. The most highly supported explanations for paying cash dividends concern signaling, the firm life cycle, and catering. Although none of the theories of repurchasing shares is dominant, respondents provide little support for the agency explanation. Research limitations/implications – Although the tests suggest that the sample does not suffer from non-response bias, the findings should be viewed as suggestive rather than definitive because of the relatively low response rate. Originality/value – The paper presents new evidence about dividend policy of Indian firms. To the knowledge, this is the most comprehensive survey of Indian firms to date that captures managerial perceptions on both cash dividends and share repurchases.

Purpose – The purpose of this paper is to provide an overview and synthesis of some important literature on dividend policy, chronicle changing perspectives and trends, provide stylized facts, offer practical implications, and suggest avenues for future research. Design/methodology/approach – The authors provide a survey of literature surveys with a focus on insights for paying cash dividends. Findings – The analysis of literature surveys on dividend policy provides some stylized facts. For example, US evidence indicates that the importance of cash dividends as a part of investors’ total returns has declined over time. Share repurchases now play an increasingly important role in payout policy in countries permitting stock buybacks. The popular view is that dividend policy is important, as evidenced by the large amount of money involved and the attention that firms, security analysts, and investors give to dividends. Firms tend to follow a managed dividend policy rather than a residual dividend policy, which involves paying dividends from earnings left over after meeting investment needs while maintaining its target capital structure. Certain determinants of cash dividends are consistently important over time in shaping actual dividend policies including the stability of past dividends and current and anticipated earnings. No universal set of factors is appropriate for all firms because dividend policy is sensitive to numerous factors including firm characteristics, market characteristics, and substitute forms of dividends. Universal or one-size-fits-all theories or explanations for why companies pay dividends are too simplistic. Practical implications – The dividend puzzle remains an important topic in modern finance. Originality/value – This is the first a survey of literature surveys on cash dividends.

The investment decision is influenced by many factors, of which one such factor is the return. The shareholders may get the return in the form of dividends which affects the share prices. The behavior of stock prices is unpredictable as price movement for different activities will move in different ways. The stock price influence activities can be divided into Economic and corporate activities. The impact of economic activities will be more or less the same on all the stock prices, while the impact of corporate action varies from one stock to the other. Dividend payment is one of the essential corporate actions that will impact the behavior of stock prices. This research highlights the impact of dividend payment on the behavior of stock prices and their abnormal returns. To understand this behavior, 120 stocks have been randomly picked, which have paid cash dividends in 2016 and used the popular event methodology.

By studying Chinese firms that issued A-shares in the Shanghai and Shenzhen markets from 2004 to 2010, we examine how political uncertainty, caused by a change of Party chief at the municipal level, affects firms’ cash dividend decisions. We find that political uncertainty leads to a more prudent cash dividend policy. First, non-dividend-payers are less likely to initiate dividends due to political uncertainty. Secondly, political uncertainty significantly reduces the level of dividend payments. Compared with privately-owned firms, state-owned firms are more likely to adopt prudent cash dividend policies. The prudent adjustments of cash dividend policies due to political uncertainty have significant positive market effects.

The objectives was to find empirical evidence of the influence fi­nan­cial d­e­cisions, firm size, and owner­ship structure on firm value in the three economic con­di­tions (before, during, and after the crisis). The model was used mul­tiple reg­ression. The study was con­duc­ted in 1992–2008 with samples of 78 public com­pa­nies and 1084 datas. The results explained that company size and de­cision not to pay dividends were most af­fected varia­bles. In addition, policy not to pay dividends had negative ef­fect on firm value. There were also significant differences of company value. For public companies, company's size should be considered. Po­li­cies of paying cash dividends could be con­sidered in order to increase company value .

We study the influence on firm risks of NASDAQ and NYSE firm payout initiations and omissions. These payout events can be interpreted as managerial signals of firm financial life-cycle maturation resulting in concomitant changes in firm risks. We remove confounding payout types and we match on the propensity to initiate or omit informed by determinants of payout known to investors in advance. For payout event and matched firms, we apply the difference-in-differences method to estimate the effect of the information content of actual initiations and omissions on firm risks. We find consistent significant declines in total, aggregate systematic, and idiosyncratic firm risks after cash dividend initiations and increases after dividend omissions, but only incidentally after share repurchase initiations and omissions. (C) 2014 Elsevier B.V. All rights reserved.

Purpose– The purpose of this paper is to examine preferences of Chinese individual and institutional investors to cash dividends and stock dividends. Using categorized daily holding information from the TOPVIEW database, the authors test how percentage holdings of individuals and institutional investors change, respectively, around annual report dates and registration dates.Design/methodology/approach– The results show that individuals and institutional investors often express heterogeneous preferences to dividends. After controlling for firm size and market performance, the authors find that the higher the ratio of stock dividend is, the more likely institutional investors will increase their overall holdings of the stock-dividend-paying firm in the week after annual report date, but they do not prefer to do so around registration dates. Meanwhile, the higher the ratio of stock dividend is, the more likely individual investors will increase their overall holdings of the stock-dividend-paying firm in the week before registration date, but do not prefer to do so after annual report dates. Such patterns do not exist for cash-dividend-paying firms.Findings– The results imply that different types of investors chase high stock-dividend-paying firms at different stages of dividend events. The findings are consistent with the hypothesis of “price illusion,” but do not lend support to the signaling hypothesis of stock dividends.Originality/value– This paper uses categorized data of daily share holdings to test how different types of minority shareholders respond to stock dividends and cash dividends for the first time. It sheds lights on the on-going academic debate about the “stock dividend puzzle” in China.

This paper investigates whether percentage of ownership controlled by the directors of companies has any association with types of dividend declared by them. Based on the data for the years 2006 to 2009 from the Dhaka Stock Exchange, this paper found that most of the companies provided stock dividends rather than cash dividends. Using Yate’s Continuity Correction Chi-square Test, this study has found existence of a significant relationship between the percentage control of ownership and types of dividend declared. Furthermore, the study indicates that the companies having ≥ 50% share controlled by the directors are 3 times more likely to offer stock dividends than companies having

A limitation of prior research on imputation credit value is researchers’ selective interpretation of the regression coefficient used to estimate credit value. This ignores the in-sample evidence on the value of cash dividends and the value of a fully-franked dividend. This is a problem because a sample of security prices, unfranked dividends and franked dividends necessarily leads to the simultaneous estimation of the value of a cash dividend and an imputation credit. We measure the value of imputation credits under three tax regimes, accounting for the joint estimation of the value of cash and credits. The practical implication is that in the cash rebate regime, the market value of imputation credits lies within the range of -0.12 to 0.17. A dollar of cash is valued by the market at somewhere between 88 cents and 98 cents. At the lower end of the cash value (0.88), credits are worth between 0.04 and 0.17; and at the higher end of cash value (0.98), credits are worth between -0.12. and 0.00. The value of imputation credits has, in our view, moved over time in a direction consistent with changing tax treatment. But it is plausible that the value of imputation credits has remained within the range of -0.04 to 0.06 across all three tax regimes.

This paper investigates the cash flow sensitivity of cash dividends in different cash dividend taxation systems. Using a cross-country study, we find that a firm's dividend policy in a single dividend taxation system (relative to a double dividend taxation system) is more sensitive to cash flow as measured by the propensity to initiate a cash dividend, propensity to pay a cash dividend, and in the size of the cash dividend. The cash flow sensitivity of cash dividends is asymmetric -- firms in single taxation systems more aggressively adjust dividend policy when confronted with negative rather than positive cash flows. Our findings are qualitatively identical before and after the 2003 dividend tax cut in the United States.

We use a survey approach to investigate the factors leading to the decision not to pay cash dividends in Canada. Our results show that Canadian managers perceive growth opportunities, low profitability and cash constraints as the major reasons underlying a firm's decision not to pay dividends. Questionnaire results also show that, for non-dividend-paying firms, taxation is at best a second-order determinant of dividend policy and that stock repurchases are not substitutes for dividends. Finally, our findings are inconclusive regarding managers’ views on the relationship between dividend policy and stock prices and the signaling role of dividend policy.

Previous studies have documented that an announcement of dividend initiation and resumption is associated with an increase in stock price, while Boehme and Sorescu (J Finance 47:871–900, 2002) argue that the dividend anomaly only occurs by chance. However, their sample contains firms listed within 3 and/or 5 years of their respective initial public offering (IPO) dates, as well as regulated firms. We conjecture that the confounding effects of IPOs and regulated firms may interfere with the increase in stock prices due to dividend initiations and resumptions and bias their results. We thus reexamine the long-term stock performance following dividend initiations and resumptions by excluding newly IPO firms and regulated firms. We find no evidence that the non-robust positive price drifts for firms, which initiate or resume cash dividends, is due to the confounding effects of IPOs and regulated firms. Therefore the price drifts after dividend initiation and resumption announcements may be a sample-specific result of chance, even after controlling for possible sample selection biases.

We test the impact of taxes and governance systems on dividend payouts across countries. We show that, unlike previous studies, firms in strong investor protection countries pay lower cash dividends than in weak protection countries when the classical tax system is implemented, but they repurchase more shares to maximise their shareholders' after-tax returns. In weak protection countries, cash dividends and repurchases are low and less responsive to taxes. Our results suggest that when investors are protected, they weigh the tax cost of dividends against the benefit of mitigating the agency cost, but, when they are not, they accept whatever dividends they can extract, even when this entails high tax costs.

This study investigates the intra-industry effects of cash dividend announcements for U.S. real estate investment trusts (REITs). That is, based on the market model framework, this study examines whether a change in an announcing REIT’s dividends has information externality on its peers/rivals. Our results suggest that REIT dividend announcements have contagion effects. In addition, consistent with the existing literature, these contagion effects are found to be asymmetric and more prevalent for dividend-decreasing events.

Using data from 944 public companies in 2006, I examine how a firm's propensity to pay dividends is related to (i) board independence and (ii) independent directors' tenure, number of board seats (busy) and equity incentive compensation. After controlling for the effects of traditional economic, CEO entrenchment and ownership determinants of the propensity to pay dividends, I find evidence of a positive association between the propensity to pay and (i) board independence and (ii) director tenure, and a negative association between the propensity to pay and (i) busy directors and (ii) greater equity incentive compensation in the director pay structure. I find consistent results when the decision is to pay cash dividends or repurchase shares. In further tests, I find that equity incentive compensation in the independent director pay structure is the most pervasive determinant across other dividend measures such as dividend payout, total payout and repurchases. Overall, the findings suggest that the characteristics of independent directors are important determinants of the payout policy. The results also suggest that future corporate governance research could benefit from incorporating characteristics of independent directors rather than limiting governance measures to board independence especially when recent empirical evidence (Linck et al., 2008, 2009) shows convergence, and therefore, narrowing variation in the proportion of outsiders and insiders on a board.