Dividend policy and corporate valuation

Purpose The purpose of this paper is to investigate an empirical solution to dividend policy relevance. Design/methodology/approach The paper combines measures of firm maturity in a logit regression to define a comprehensive life-cycle model of the likelihood of dividend payment. The valuation of firms that conform to the model is compared to the valuation of firms that do not fit the model. Valuation is measured by the market to book (M/B) ratio. Findings The analysis indicates that dividend policy is related to firm value. Dividend-paying firms that fit the life-cycle model have a higher median valuation than dividend-paying firms that do not fit the life-cycle model. Similarly, non-paying firms that fit the life-cycle model have a higher median valuation than non-paying firms that do not fit the life-cycle model. The results also provide evidence that the disappearing dividend phenomenon is related to shifts in valuation. Research limitations/implications This paper focuses on the payment of dividends. Stock repurchases are not considered. Practical implications The results indicate that dividend policy is related to firm value. Approximately 15 percent of sample observations have a dividend policy counter to the life-cycle model. Originality/value This paper shows that the relation between a firm’s M/B ratio and dividend policy changes over the firm’s life-cycle. It also shows that the catering motive for dividends is strongest among firms that are outliers in the life-cycle model and firms of intermediate maturity.

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Stakeholder performance, corporate social performance

Society and Business Review ◽

10.1108/sbr-06-2018-0062 ◽

2019 ◽

Vol 14 (3) ◽

pp. 242-253

Author(s):

Jean Biwole Fouda ◽

Irène Abessolo Abessolo

Keyword(s):

Life Cycle ◽

Corporate Social Performance ◽

Social Performance ◽

The Other ◽

Life Cycle Model ◽

Cycle Model ◽

Dominant Type ◽

Content Type ◽

Essentially Contested Concepts ◽

Corporate Social

Purpose The purpose of this paper is to find out what added value does the stakeholder performance concept bring with respect to that of corporate social performance. To better understand the developments of these concepts, the authors resort to Gallie’s theory (1956) of essentially contested concepts, the life-cycle model of Hirsch and Levin’s (1999) umbrella concepts. Reconciling these two theoretical frameworks allows us to introduce the competing category notion consisting of a dominant and a dominated-type concepts. Through a historical and synchronic literature examination, CSP is shown to have characteristics of the dominant type, thanks to its more diffuse character. On the other hand, the stakeholder performance would relate to the dominated type, though it provides better operationalization possibilities. Design/methodology/approach To better understand the developments of these concepts, Gallie’s theory (1956) of essentially contested concepts, the life cycle model of Hirsch and Levin’s (1999) umbrella concepts are used. Findings CSP has characteristics of the dominant type, thanks to its more diffuse character. On the other hand, the stakeholder performance relates to the dominated type, though it provides better operationalization. Originality/value CSP as a dominant type and stakeholder performance is a dominated type.

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A hotel life cycle model based on bootstrap DEA efficiency

International Journal of Contemporary Hospitality Management ◽

10.1108/ijchm-12-2013-0562 ◽

2015 ◽

Vol 27 (5) ◽

pp. 918-937 ◽

Cited By ~ 15

Author(s):

Pengzhen Yin ◽

Henry Tsai ◽

Jie Wu

Keyword(s):

Life Cycle ◽

Life Cycles ◽

Initial Growth ◽

Life Cycle Model ◽

Cycle Model ◽

Content Type ◽

Average Efficiency ◽

Dea Model ◽

Bootstrap Dea ◽

Objective Indicators

Purpose – This study aims to propose a hotel life cycle model and applies this model to examine the development of international tourist hotels (ITHs) in Taipei. Design/methodology/approach – In this study, a two-stage approach is proposed to examine the life cycles of 20 ITHs in Taipei. First, we evaluate the overall and departmental efficiencies by using a two-layer bootstrap data envelopment analysis (DEA) model. Second, we divide the phases of the hotel life cycle by incorporating two objective indicators, namely, the average efficiency change rate (AECR) and the annual average efficiency (AE). Findings – The results show not only that the efficiency scores derived from the bootstrap DEA model could help assess the performance of individual ITHs but also that the resulting AECR and AE could help to objectively classify the development of the hotels under study into the following phases: initial, growth, maturity and recession and regeneration phases. Practical implications – The method proposed in, and the results obtained from, this study can provide the stakeholders of the ITHs in Taipei with an alternative to the existing subjective enterprise life cycle (ELC) model for identifying these ITHs’ stages of development using quantitative and objective criteria. Originality/value – Existing hotel management research rarely focuses on hotel life cycle analysis, likely due to the adoption of subjective criteria by the conventional ELC model, which limits the practical application of the research. To improve on the conventional ELC model, our proposed quantitative approach involves dividing the hotel life cycle by employing two objective indicators and then empirically presenting the results.

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Dividend policy in India: reconciling theory and evidence

Managerial Finance ◽

10.1108/mf-07-2019-0344 ◽

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.

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Life cycle and performance among SMEs: Swedish empirical evidence

The Journal of Risk Finance ◽

10.1108/jrf-04-2014-0043 ◽

2014 ◽

Vol 15 (5) ◽

pp. 555-571 ◽

Cited By ~ 3

Author(s):

Darush Yazdanfar ◽

Peter Öhman

Keyword(s):

Life Cycle ◽

Firm Performance ◽

Analysis Of Variance ◽

Set Covering ◽

Life Cycle Model ◽

Cycle Model ◽

Data Set ◽

Content Type ◽

Life Cycle Stages ◽

Performance Pattern

Purpose – This study aims to empirically examine the applicability of the life cycle model of firm performance to growth and profitability among Swedish small- and medium-sized enterprises (SMEs). Design/methodology/approach – Using analysis of variance, multiple analysis of variance and three-stage least square modelling, this study analyses a longitudinal data set covering 26,721 Swedish SMEs in six industries from 2008 to 2011. Findings – The empirical results indicate a clear life cycle performance pattern among the sampled SMEs, and that a six-stage life cycle model is applicable in predicting the performance pattern in terms of growth and profitability. On average, younger SMEs tend to display better performance in terms of growth and profitability than do their older and larger counterparts; moreover, larger SMEs tend to achieve better performance than do smaller ones. Practical implications – The findings help SME managers understand how their decision-making style, strategy and structure can be related to various life cycle stages. Such an understanding may help them improve firm performance over time. Policymakers may find the results useful in coordinating SME support in line with various life cycle stages. Originality/value – To the authors’ knowledge, this study is one of only a few using two performance variables to test the applicability of the life cycle model in a longitudinal and cross-industrial sample.

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