Determinants of dividend payout of construction companies: a panel data analysis

2019 ◽  
Vol 24 (1) ◽  
pp. 19-38 ◽  
Author(s):  
Harish Kumar Singla ◽  
Pradeepta Kumar Samanta
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Dividend Policy ◽  
Random Effect ◽  
Small Sample ◽  
Construction Sector ◽  
Dividend Payout ◽  
Content Type ◽  
Explanatory Variables ◽  
Construction Companies

Purpose This paper aims to examine the determinants of the dividend policy of the construction companies in India. Design/methodology/approach Data from 2011 to 2016 (six years) of 45 listed construction companies in India are collected, and a strong balanced panel is created. Dividend per share is dependent variable, and profitability, unstable earnings, institutional holding, cash flow, tangibility, liquidity, growth opportunities, age of the firm, life cycle, leverage, size of firm and taxation are explanatory variables. The panel is tested for stationarity and finally fixed and random-effect panel regression model with robust estimation option is performed. Findings The random effect model is found fit with an R2 of 62 per cent, and profitability, life cycle and size of the firm show a significant positive effect on dividend payment. Cash flow shows a negative significant relationship, indicating the presence of agency problem. Rest of the variables indicated an insignificant relationship. Research limitations/implications The study is carried out on a small sample of 45 companies with data of only six years. Further, there may be behavioral and psychological factors that drive the decision to declare dividend. Those factors have not been considered in present study. Despite considerable efforts, the author could not find more studies specific to the construction sector. Hence, the variables identified in the present study are more generic, even though a few sector-specific studies have been included. Originality/value The dividend policy determinants for the construction sector in India are investigated, and a comprehensive model based on 12 explanatory variables is tested to find the drivers of dividend payout in Indian construction companies. From the investor’s point of view, the sector has immense potential in terms of dividend as well as capital appreciation. Therefore, the study can be useful to the investors to understand the drivers of dividend payout in the construction sector. It can also be crucial for companies to create an appropriate dividend policy so as to attract and retain investors. The study contributes significantly to the existing body of knowledge by recommending the salient drivers of dividend payout in the construction sector based on a comprehensive dataset and using robust methodology.

Corporate governance and financial policies

2015 ◽  
Vol 41 (3) ◽  
pp. 267-285 ◽  
Author(s):  
Subba Reddy Yarram ◽  
Brian Dollery
Keyword(s):  
Corporate Governance ◽  
Life Cycle ◽  
Dividend Policy ◽  
Agency Cost ◽  
Positive Influence ◽  
Independent Directors ◽  
Board Independence ◽  
Dividend Payout ◽  
Content Type ◽  
Significant Positive Influence

Purpose – The purpose of this paper is to examine the influence of board structure on dividend policy of Australian corporate firms. It also considers the traditional explanations of corporate dividend choice, such as agency cost theory, signalling hypothesis, the life cycle hypothesis along with tax-based explanations of dividend policy. Design/methodology/approach – The final sample consists of 413 non-financial firms that are part of the All Ordinaries Index. The causal analysis was undertaken in three stages. In the first stage, the authors analyse the likelihood of paying dividends. And classify all firms as either dividend payers or non-payers. The authors then model this binary variable as a function of different sets of variables. In the second stage, the authors analyse the factors determining the magnitude of dividend payout by those firms that have paid a dividend. In contrast, stage three employs all firms – those which did not pay any dividend and those firms which paid a dividend. Findings – For the study period 2004-2009, this study finds that board independence has a significant positive influence on the dividend payout of Australian firms. This finding is consistent with the “outcome” model of La Porta et al. (2000). This study also finds that size has a significant positive influence on the dividend payout of Australian firms thus providing support for the agency cost view of dividend policy. Similarly, this study also finds support for the signalling hypothesis and the life cycle theory given the significant positive influence of profitability and the significant negative influence of current losses and growth opportunities on the dividend policy of Australian firms. Research limitations/implications – The findings of the study are robust with to alternative measures of variables employed and are not influenced by the global financial crisis. However, this study did not consider the possible endogenous and multiple relationships between dividends, debt, profitability, cash holdings and governance structures given the limited study period considered. Practical implications – This study finds that board independence has a significant positive influence on the dividend behaviour of Australian firms. This suggests that dividends and independent directors play complementary governance roles. While dividends provide the monitoring and disciplinary roles, independent directors act as catalysts for enhancing effective board functioning. These findings have implications for corporate governance policies and the payout policies. Originality/value – Though the governance role of dividends has long been recognized in the literature (Easterbrook, 1984; Jensen, 1986), very few studies analyse the influence of board characteristics on the decision to pay dividends in Australia. Given the distinct Australian setting where the tax imputation system allows companies to pay franked dividends to domestic investors, this study provides evidence on the interaction of corporate and dividend policies. This study finds that dividend polices are influenced by percentage franking of dividends. This study also finds that board independence has a significant positive influence on the dividend policy of Australian firms.

Dividend policy in India: reconciling theory and evidence

2020 ◽  
Vol 46 (11) ◽  
pp. 1437-1453
Author(s):  
Bipin Kumar Dixit ◽  
Nilesh Gupta ◽  
Suman Saurabh
Keyword(s):  
Life Cycle ◽  
Dividend Policy ◽  
Indirect Evidence ◽  
Rate Of Change ◽  
Dividend Payment ◽  
Dividend Payout ◽  
Content Type ◽  
Life Cycle Theory ◽  
The Relationship ◽  
Indian Data

PurposeThe purpose of this paper is to examine the dividend payout behavior of Indian firms and test whether the three prominent dividend policy theories (signaling, life-cycle and catering) explain the dividend policy of Indian firms.Design/methodology/approachThe authors test the three theories using the methodology based on the studies of Nissim and Ziv (2001), DeAngelo et al. (2006) and Baker and Wurgler (2004). For testing the signaling theory, the authors regress the change in earnings on the rate of change in dividends using the pooled and Fama–Macbeth regressions. The life cycle theory is tested by running a logistic regression of the dividend payment decision on two proxies of life-cycle measured by the ratio of earned to total equity. Finally, the catering theory tests the relationship between the decision to pay a dividend and the dividend premium.FindingsThe results based on a sample of Indian firms from 1992 to 2017 show that the dividend policy of Indian firms can be explained using the life-cycle theory. However, there is no evidence in support of the signaling and catering theories.Originality/valueIt provides insights into the dividend policy of Indian firms. Though there have been a few studies examining the dividend payout in India, none of the existing studies tests these theories of dividend payout. The existing research using the Indian data provides indirect evidence about the life-cycle theory. This study is the first one to test the application of these theories for Indian firms.

Pengaruh ROE, EPS, OCF, Size, DER, CR dan Growth Terhadap Kebijakan Dividen pada Perusahaan Manufaktur di Bursa Efek Indonesia (BEI)

2019 ◽  
Vol 14 (2) ◽  
pp. 80
Author(s):  
Crystha Armereo ◽  
Pipit Fitri Rahayu
Keyword(s):  
Cash Flow ◽  
Dividend Policy ◽  
Regression Result ◽  
Manufacturing Companies ◽  
Current Ratio ◽  
Dividend Payout ◽  
Return On Equity ◽  
Earnings Per Share ◽  
Equity Ratio ◽  
Operating Cash Flow

Abstract The objective of this research is to identify the influence of return on equity, earnings per share, operating cash flow, size, debt to equity ratio, current ratio, and growth to dividend payout. Data collected from manufacturing companies that listed on Indonesian Stock Exchange for three years period 2014 to 2016. Sample selected by using purposive sampling method. There are 38 companies meet the criteria and used as sample. The statistical method used in this research is multiple regression. Result of this research showed that return on equity, earnings per share, and growth have influence dividend payout but operating cash flow, size, debt to equity ratio, and current ratio have no influence towards dividend policy. Keywords: Dividend Policy, Return on Equity, Earnings per Share, Current Ratio,   Operating Cash Flow Size

Sustainable life cycle offers through cooperation

2015 ◽  
Vol 4 (1) ◽  
pp. 4-24 ◽  
Author(s):  
Julia Selberherr
Keyword(s):  
Sustainable Development ◽  
Life Cycle ◽  
Business Model ◽  
Value Creation ◽  
Business Models ◽  
Service Providers ◽  
Construction Sector ◽  
Content Type ◽  
New Business ◽  
Societal Level

Purpose – Sustainable buildings bear enormous potential benefits for clients, service providers, and our society. To release this potential a change in business models is required. The purpose of this paper is to develop a new business model with the objective of proactively contributing to sustainable development on the societal level and thereby improving the economic position of the service providers in the construction sector. Design/methodology/approach – The modeling process comprises two steps, the formal structuring and the contextual configuration. In the formal structuring systems theory is used and two levels are analytically separated. The outside view concerns the business model’s interaction with the environment and its impact on sustainability. The inside view focusses on efficient value creation for securing sustainability. The logically deductively developed business model is subsequently theory-led substantiated with Giddens’ structuration theory. Findings – The relevant mechanisms for the development of a new service offer, which creates a perceivable surplus value to the client and contributes to sustainable development on the societal level, are identified. The requirements for an efficient value creation process with the objective of optimizing the service providers’ competitive position are outlined. Research limitations/implications – The model is developed logically deductively based on literature and embedded in a theoretical framework. It has not yet been empirically tested. Practical implications – Guidelines for the practical implementation of more sustainable business models for the provision of life cycle service offers are developed. Social implications – The construction industry’s impact requires it to contribute proactively to a more sustainable development of the society. Originality/value – This paper analyzes the role for the players in the construction sector in proactively contributing to sustainable development on the societal level. One feasible strategy is proposed with a new business model, which aims at cooperatively optimizing buildings and infrastructures and taking the responsibility for the operating phase via guarantees.

The impact of board composition and ownership structure on dividend payout policy: evidence from Saudi Arabia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Helmi A. Boshnak
Keyword(s):  
Saudi Arabia ◽  
Ownership Structure ◽  
Dividend Policy ◽  
Payout Policy ◽  
Board Composition ◽  
Dividend Payout ◽  
Content Type ◽  
Listed Firms ◽  
Propensity To Pay ◽  
The Impact

PurposeThis study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.Design/methodology/approachThe paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.FindingsThe results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.Research limitations/implicationsThis study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.Originality/valueThis paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

scholarly journals Simulation evidence on the properties of alternative measures of working capital accruals

2017 ◽  
Vol 25 (4) ◽  
pp. 378-394
Author(s):  
Javad Izadi Zadeh Darjezi ◽  
Homagni Choudhury ◽  
Alireza Nazarian
Keyword(s):  
Cash Flow ◽  
Estimation Error ◽  
Explanatory Power ◽  
Cash Flows ◽  
Working Capital ◽  
Accrual Quality ◽  
Content Type ◽  
Explanatory Variables ◽  
Study Results ◽  
The Uk

Purpose This paper aims to investigate the specification and power of tests based on the DD and modified DD model through the UK data between years 2000 and 2013, and make comparisons with tests using working capital accruals creating a measure of accruals quality as the standard deviation of the residuals value from firm-specific regressions base on working capital accruals on last, current and one-year-ahead cash flows from operations. Design/methodology/approach This study focuses both on the DD model and modified DD model to find out which of them can more accurately capture total working capital accrual estimation error and accrual quality. According to the DD model, the past, current and future net cash from operating activities as the three years’ operating cash inflows or outflows become omitted and correlated variables. In this study, the authors continue to document residuals from the DD and MDD models to demonstrate properties that are more consistent with behaviours of accruals estimation errors. Therefore, in this study, the authors are looking to compare the results from both the MDD and DD models and find which one of them is more effective in explaining the working capital accruals in the UK. Findings The authors find that adding additional explanatory variables may add additional explanatory power of variables to the DD model and extent to which accruals map into cash flow insights based on the UK data. This study is empirically well fitting with the internal workings of cash flows. As investors fixate only on the accounting earnings, they may fail to reflect fully on information contained within cash flow components and working capital accruals of current and future earnings. Originality/value The authors compare different equation to cover more items of working capital accruals. In addition, after examining earnings and accrual quality, the findings show that the average UK company behaviour was quite similar to the behaviour that was founded earlier for both models in the USA. Furthermore, this study results show that more volatility of sales, cash flow, accruals and earnings make a lower accrual quality. The results demonstrate that both models can capture the power to predict working capital accruals. Moreover, we find that adding additional explanatory variable of employee growth rate adds additional explanatory variables to DD model.

Slack resources, free cash flow and corporate social responsibility expenditure: evidence from an emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shah Md Taha Islam ◽  
Ratan Ghosh ◽  
Asia Khatun
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Random Effect ◽  
Emerging Economy ◽  
Free Cash Flow ◽  
Slack Resources ◽  
Content Type ◽  
Review Reports ◽  
Corporate Social

PurposeThe purpose of this study is to investigate whether financial resource allocation decisions for corporate social responsibility (CSR) depends on slack resources and free cash flow.Design/methodology/approachThe study's sample consists of 202 company-year observations from 51 financial institutions over the period 2015–2019. The authors collected CSR data from CSR review reports published by the Central Bank (Bangladesh Bank). The financial and governance data are collected from corporate annual reports and year-end review reports published by the Dhaka Stock Exchange. This study uses both the random-effect and generalized estimating equation models to test the hypotheses.FindingsThe authors establish two key findings consistent with the predictions of slack resource theory and free cash flow theory. First, the authors find a significant and positive relationship between slack resources and CSR expenditure. This result also supports the traditional thinking about corporate giving – that doing well enables doing good. Second, the author show that increases in free cash flow are associated with increases in CSR expenditure. This indicates the presence of agency problems between managers and shareholders regarding CSR expenditure.Originality/valueThis study is the first to show the positive impacts of slack resources and free cash flow on CSR expenditure in an emerging economy characterized by both capital constraints and high salience of CSR expenditure. The study has important implications for regulators, advocacy groups, shareholders and analysts in emerging economies that share similar contextual characteristics.

Sustainable construction

2020 ◽  
Vol 20 (2) ◽  
pp. 191-207 ◽  
Author(s):  
Muhammad Waseem Khan ◽  
Yousaf Ali
Keyword(s):  
Life Cycle ◽  
Rice Husk ◽  
Life Cycle Cost ◽  
Sustainable Construction ◽  
Partial Replacement ◽  
Content Type ◽  
Government Organizations ◽  
Construction Companies ◽  
Concrete Type ◽  
The Impact

Purpose The change in climate and depletion of natural resources because of the harmful emissions from different materials becomes a main issue for the globe. Some of the developed and developing countries have focused on this issue and performed research to provide a solution. The purpose of this study is to identify the best types of concrete based on its impact on the environment and economy. Design/methodology/approach The life cycle assessment and life cycle cost analysis of six concrete mixtures that include construction and demolition wastes (CDW), marble sludge, rice husk and bagasse ash as a partial replacement of cement, are performed. These types of concrete are compared with each other and with ordinary concrete to select the best possible concrete type for a developing country, like Pakistan. Findings The results show that, although for an agricultural country like Pakistan, the agriculture wastes such as rice husk and bagasse ash are preferable to be used, if the emissions of CO2 and CO from rice husk and NOx and SO2 from bagasse ash are properly controlled. However, based on the results, it is recommended to use the CDW in concrete because of the small amount of air emissions and affordable prices. Originality/value Through this study, a path has been provided to construction companies and relative government organizations of Pakistan, which leads to sustainable practices in the construction industry. Moreover, the base is provided for future researchers who want to work in this area, as for Pakistan, there is no database available that helps to identify the impact of different concrete on the environment.

Dividend policy determinants of Sri Lankan firms: a triangulation approach

2019 ◽  
Vol 45 (1) ◽  
pp. 2-20 ◽  
Author(s):  
H. Kent Baker ◽  
N. Jayantha Dewasiri ◽  
Weerakoon Banda Yatiwelle Koralalage ◽  
Athambawa Abdul Azeez
Keyword(s):  
Sri Lanka ◽  
Survey Data ◽  
Cash Flow ◽  
Dividend Policy ◽  
Hybrid Approach ◽  
Secondary Data ◽  
Free Cash Flow ◽  
Primary Data ◽  
Sri Lankan ◽  
Content Type

PurposeThe purpose of this paper is to identify the dividend policy determinants of Sri Lankan firms and why they pay dividends.Design/methodology/approachThe study uses several quantitative approaches to investigate dividend determinants using market (secondary) data of 190 Sri Lankan firms and 1,330 firm-year observations. Dividend determinants are also identified using survey (primary) data from 141 of the 190 firms. Triangulation is then used to facilitate validation of the data through cross-verification from two data sources.FindingsAnalysis of the market data reveals that firm size, industry impact, corporate governance, free cash flow, earnings, past dividends, profitability, investment opportunities, net working capital, concentrated ownership structure and investor preference represent the most important dividend determinants. Survey data confirm these findings. The evidence supports the pecking order, signaling, free cash flow, catering and outcome theories using both secondary and primary data and the bird-in-the-hand theory using survey data.Research limitations/implicationsThe findings are useful not only for corporate decision makers in establishing an appropriate dividend policy but also for shareholders in making investment decisions. Because the current study is limited to Sri Lanka, future researchers should study the same phenomenon in other countries using the triangulation approach.Originality/valueThis study provides a hybrid approach to dividend policy research by using both primary and secondary data in a single study. It is the first dividend study in Sri Lanka to use a triangulation approach.

Dividend policy and stock price volatility of industrial products firms in Malaysia

2018 ◽  
Vol 13 (1) ◽  
pp. 203-217 ◽  
Author(s):  
Rozaimah Zainudin ◽  
Nurul Shahnaz Mahdzan ◽  
Chee Hong Yet
Keyword(s):  
Stock Price ◽  
Dividend Policy ◽  
Price Volatility ◽  
Industrial Products ◽  
Stock Price Volatility ◽  
Dividend Payout ◽  
Content Type ◽  
Crisis Period ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to analyse the relationship between stock price volatility (SPV) and dividend policy of industrial products firms listed on Bursa Malaysia. Design/methodology/approach The sample comprises 166 industrial products public-listed firms covering a time span from year 2003 to 2012. Using Baskin’s framework, firm’s SPV is related to dividend payout, controlling for earnings volatility, firm size, leverage and growth of assets. Further, the impact of the global financial crisis on the relationship between SPV and the tested variables is examined. Findings Earning volatility significantly explains SPV of industrial product firms during the crisis period, while dividend payout ratio (PR) predominantly influences volatility during pre- and post-crisis sub-periods. The empirical results indicate that dividend policy is a strong predictor of SPV of industrial products firms in Malaysia, particularly during the post-crisis period. Originality/value The paper explores the firm’s SPV and dividend policy for a new set of data focussing on industrial products firms listed on the Malaysian Stock Exchange.

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