Dividend Smoothing and Debt Ratings

2006 ◽  
Vol 41 (2) ◽  
pp. 439-453 ◽  
Author(s):  
Varouj A. Aivazian ◽  
Laurence Booth ◽  
Sean Cleary
Keyword(s):  
Public Debt ◽  
Dividend Policy ◽  
Bond Markets ◽  
Bank Debt ◽  
Private Bank ◽  
Bond Ratings ◽  
Dividend Payment ◽  
Dividend Smoothing ◽  
Flow Through

AbstractWe find that firms that regularly access public debt (bond) markets are more likely to pay a dividend and subsequently follow a dividend smoothing policy than firms that rely exclusively on private (bank) debt. In particular, firms with bond ratings follow a traditional Lintner (1956) style dividend smoothing policy, where the influence of the prior dividend payment is very strong and the current dividend is relatively insensitive to current earnings. In contrast, firms without bond ratings flow through more of their earnings as dividends and display very little dividend smoothing behavior. In effect, they seem to follow a residual dividend policy.

Is Bangladesh Rolling towards Debt Stress? An Exploration of Debt Sustainability in the Context of Recent External Financial Flows

2018 ◽  
Vol 7 (2) ◽  
pp. 137-173
Author(s):  
Debapriya Bhattacharya ◽  
Zeeshan Ashraf
Keyword(s):  
Public Debt ◽  
Jel Classification ◽  
Bank Debt ◽  
Financial Flows ◽  
Economic Growth Rate ◽  
Debt Sustainability ◽  
Alternative Future ◽  
Debt Stress ◽  
Sustainability Of Public Debt ◽  
Sustainability Framework

This article examines the sustainability of public debt in Bangladesh under alternative future scenarios based on simulation exercises for the period of FY2017 to FY2026. It adopts the debt-stabilizing primary balance approach (DPSBA) and International Monetary Fund/World Bank Debt Sustainability Framework (DSF). The findings of the former indicate that Bangladesh will be able to service its increasing public debt as long as its economic growth rate remains higher than the real interest rate payable on debt. Public debt also appears to be sustainable according to variables tested under the DSF. However, findings indicate that Bangladesh has been and would continue allocating an increasing share of its revenue to external debt repayment, creating a trade-off with investment in growth-oriented sectors. JEL Classification: H63, H68, H69, H81, G28

scholarly journals The effects of dividend policy to stock prices of listed companies in Vietnam stock market

2020 ◽  
Author(s):  
Thị Lam Hồ ◽  
Thùy Phương Trâm Hồ
Keyword(s):  
Stock Market ◽  
Stock Prices ◽  
Stock Price ◽  
Dividend Policy ◽  
Corporate Value ◽  
Business Managers ◽  
Dividend Payment ◽  
Share Prices ◽  
Finance Management ◽  
The Impact

Dividend policy is one of the most important policies in corporate finance management. Understanding the impact of dividend policy on the distribution of profits, corporate value and thus on the stock price is important for business managers to make policies and for investors to make investment decisions. This study is conducted to evaluate the impact of dividend policy on share prices for companies listed on Vietnam’s stock market in the period from 2010 to 2018, based on the availability of continuous dividend payment data. Using the FGLS method with panel data of 100 companies listed on the HoSE and HNX, we find evidence of the impact of dividend policy on stock prices, supporting supports the bird in the hand and the signal detection theories. The findings of this study help to suggest a few recommendations for business managers and investors.

scholarly journals Ownership Structure and Dividend Policy of Listed Deposit Money Banks in Nigeria: A Tobit Regression Analysis

2016 ◽  
Vol 6 (1) ◽  
pp. 1 ◽  
Author(s):  
Idris Ibrahim ◽  
Hussaini Shuaibu
Keyword(s):  
Ownership Structure ◽  
Dividend Policy ◽  
Institutional Ownership ◽  
Free Cash Flow ◽  
Ownership Concentration ◽  
Managerial Ownership ◽  
Tobit Regression ◽  
Diverse Range ◽  
Dividend Payment ◽  
Ex Post

Free cash flow hypothesis posit that regular paying of dividend can reduce agency conflict and through this, the range of future probable misuse of resources by management reduces. Ownership structure has been identified to have relationship with dividend policy of a firm.  Though the relationship is different for different class of owners and at different level; it does not influence dividend policy uniformly. Although, the linkage between the two has been monitored by many researchers, yet empirical researches do not provide consensus as to the direction of the relationships. Thus, the paper investigates the likelihood impact of ownership structure on dividend policy in the context of agency relation while using managerial ownership, institutional ownership, ownership concentration and foreign ownershipon dividend policy in the listed Deposit Money Banks (DMBs)in Nigeria. The research designs are Correlational and ex-post facto using secondary data extracted from the sampled companies’ annual financial reports for the period 2010-2014. Maximum likelihood (panel data tobit regression) is adopted as a technique of analysis for the study, using a sample of ten (10) out of seventeen (17) listed DMBs in Nigeria that served as population. The result shows that managerial ownership and ownership concentration are likely to have significant negative impact on dividend policy of listed DMBsin Nigeria, while institutional ownership is found to have likely significant positive impact on dividend policy of listed DMBs in Nigeria. But foreign ownership is found not to have likely significant impact on dividend policyof listed DMBsin Nigeria. Based on the findings, it is recommended among others that policy makers (Security and Exchange Commission and Corporate Affairs Commission) to design future policies where dividend payment could be facilitated and the diverse range of shareholders to be satisfied most especially minority shareholders. And that a limit should be set for managers on the proportion of shares to be held as this can facilitate dividend payment.

scholarly journals Managing Earnings V/S Strategizing Dividends: Sectoral Evidence from Pakistan Stock Exchange

2018 ◽  
Vol 13 (2) ◽  
pp. 218
Author(s):  
Farhan Ahmed ◽  
Javed Ahmed
Keyword(s):  
Dividend Policy ◽  
Oil And Gas ◽  
Positive Impact ◽  
Stock Exchange ◽  
Earning Management ◽  
Annual Data ◽  
Dividend Payment ◽  
Relationship Of ◽  
The Relationship ◽  
Bahasa Indonesia

<p><em>This paper means to inspect the regression between the Price to Book ratio as a proxy for earning management and payout proportion as a proxy to dividend policy. This paper utilizes multivariate analysis to examine the relationship between the price to book ratio and dividend policy. Using 11 years’ annual data from 2006-2016, this paper delivers new confirmation demonstrating that timely payment of dividend has a positive impact on the reputation of the company in the market. Dividend payment boosts up investors’ confidence to invest in the company. This study helps the corporate superintendents and stock financial experts to focus on the relationship of the dividend. No past review has handled the issue of the contingent relationship between the price to book ratio and payout proportion in Pakistani Industry and specifically on cement, food and oil and gas sectors</em>.</p><p><strong>Abstrak dalam Bahasa Indonesia</strong> : Tulisan ini bermaksud untuk meneliti regresi antara Price to Book Ratio sebagai proksi untuk manajemen penghasilan dan proporsi pembayaran sebagai proksi untuk kebijakan dividen.Penelitian ini menggunakan analisis multivariat untuk menguji hubungan antara Price to Book Ratio dan kebijakan dividen. Dengan menggunakan data tahunan selama 11 tahun dari 2006-2016, artikel ini memunculkan suatu konfirmasi yang menunjukkan bahwa pembayaran dividen tepat waktu memiliki dampak positif pada reputasi perusahaan di pasar. Pembayaran dividen meningkatkan kepercayaan investor untuk berinvestasi di perusahaan. Studi ini membantu pengawas perusahaan dan ahli keuangan saham untuk fokus pada hubungan dividen. Belum ada penelitian sebelumnya yang menangani masalah hubungan kontingen antara Price to Book Ratio dan proporsi pembayaran dalam Industri di Pakistan dan khususnya pada sektor semen, pangan dan minyak dan gas.</p>

scholarly journals Impact of Corporate Governance on Dividend Policy: Evidence from Pakistan

2021 ◽  
Vol 3 (3) ◽  
pp. 353-366
Author(s):  
Abdul Hameed ◽  
Farheen Zahra Hussain ◽  
Khawar Naheed ◽  
Muhammad Sadiq Shahid
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Payout Policy ◽  
Least Square ◽  
Political Connection ◽  
Dividend Payment ◽  
The Impact

Purpose: The objective of the paper is to examine the impact of corporate governance on the dividend payout policy of firms listed on the Pakistan stock exchange during 2010-2020. As Pakistani investors face issues regarding their return in the shape of dividends and depend upon the firm’s corporate governance strength. To test whether changes in firm code of corporate governance have a significant influence on dividend policy. Design/Methodology/Approach: The panel data has been used for the period 2010-2020 and panel least square has been applied. Further, to test the association, following factors such delisting risk, government tenure, political connection with institutional shareholding as many political firms hold corporate shares which influence the decision to pay dividends. Findings: Findings from the fixed effect model show that corporate governance has a negative impact on dividend policy while government tenure, politically connected firm has a positive impact on the dividend. The study also concludes that firm size, profitability, tax, asset turnover, leverage, and firm shareholding also influence firm dividend payment behavior. Implications/Originality/Value: The implication of study reveals that firms must focus on strong their governance and include more independent directors on the board which leads to favorable strategies regarding investors. The investor must invest in those firm where lower political connection, pay continuous dividend either high or low decease/increase delisting chances, strong corporate governance and firm specific factors also lead to make decision of dividend payment.

The Effects of Debt Contracting on Voluntary Accounting Method Changes

2003 ◽  
Vol 78 (1) ◽  
pp. 119-142 ◽  
Author(s):  
Anne Beatty ◽  
Joseph Weber
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Bank Debt ◽  
Accounting Choice ◽  
Debt Contracts ◽  
Debt Contracting ◽  
Dividend Payment ◽  
Debt Contract ◽  
Performance Pricing ◽  
The Interest Rate

This study examines whether the provisions of a firm's bank debt contracts affect its accounting choices. Starting with a sample of firms who have bank debt and who also voluntarily changed accounting methods, we investigate whether the likelihood that the change in accounting method increased (rather than decreased) the borrower's income depends on (1) whether the change in accounting method affects the bank debt contract calculations, (2) the expected costs of violating the bank debt covenants, (3) whether performance pricing provisions affect the interest rate on the loan, and (4) whether the bank debt contract contains accounting-based dividend restrictions. After controlling for other motives for changing accounting methods, we find that borrowers whose bank debt contracts allow accounting method changes to affect contact calculations are more likely to make income-increasing rather than income-decreasing changes. This increase in likelihood of an income-increasing change is attenuated when expected costs of technical violation are lower because there is a single lender, and occurs for borrowers whose debt contacts have performance pricing and dividend restrictions. These results suggest that incentives to lower interest rates through performance pricing or to retain dividend payment flexibility influence borrowers' accounting method choices, thereby addressing the fundamental questions posed by Fields et al. (2001) of whether, under what circumstances, and how accounting choice matters.

Asset Redeployability and the Choice Between Bank Debt and Public Debt

2018 ◽  
Author(s):  
Haosi Chen ◽  
David A. Maslar ◽  
Matthew Serfling
Keyword(s):  
Public Debt ◽  
Bank Debt

scholarly journals What drives the dividend decisions in BRICS countries?

2021 ◽  
Vol 12 (3) ◽  
pp. 593-629
Author(s):  
Urszula Mrzygłód ◽  
Sabina Nowak ◽  
Magdalena Mosionek-Schweda ◽  
Jakub M. Kwiatkowski
Keyword(s):  
Dividend Policy ◽  
Value Added ◽  
Listed Companies ◽  
Stock Exchanges ◽  
Relevant Market ◽  
Firm Level ◽  
Brics Countries ◽  
Dividend Smoothing ◽  
The Individual ◽  
Retained Earnings

Research background: We examine the dividend payout policies across companies listed on the main stock exchanges in Brazil, Russia, India, China, and South Africa (BRICS). Unlike the highly developed capital markets, the literature regarding dividend policy on BRICS? stock exchanges is scarce.  Purpose of the article: The purpose of this paper is threefold: verification of the existence of dividend smoothing pattern; selection of the significant drivers that affect both dividend levels and dividend smoothing; examination of differences between dividend policy of cross- and single-listed companies. Methods: Based on a dataset of 564 companies that paid dividends for at least 11 consecutive years in the period of 1995?2015, we apply a GMM two-step estimator to assess the speed of dividend adjustment (SOA) coefficient. Further we employ the linear panel regression to indicate the individual and market determinants of the dividend levels and SOAs. In the latter case, we base on time series of the SOAs obtained from the rolling estimation technique. Finally, we conduct separate estimations for cross-listed companies. Findings & value added: We confirm a moderate level of dividend smoothing within BRICS countries. Among the firm-level characteristics affecting the SOA the most important are: ownership dispersion, age and size of a firm, retained earnings, leverage, long term debt, asset tangibility, liquidity risk ratio, and issuing the depositary receipts (DR). Two relevant market factors are found: market capitalisation and turnover in relation to GDP. Similar characteristics have a significant impact on dividends? levels in the entire sample, whereas in the subsample of cross-listed companies fewer variables are significant. Our paper is the first comprehensive attempt to investigate the dividend policy and determinants of dividend smoothing among BRICS countries.

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