Litigation risk and payout policy

2020 ◽  
Vol 46 (11) ◽  
pp. 1391-1406
Author(s):  
James Malm ◽  
Srinidhi Kanuri
Keyword(s):  
Negative Relationship ◽  
Payout Policy ◽  
Business Community ◽  
Litigation Risk ◽  
Dividend Yield ◽  
Tobit Regression ◽  
Dividend Payout ◽  
Content Type ◽  
Regression Techniques ◽  
The Relationship

PurposeThe purpose of the paper is to examine the relationship between litigation risk and payout policy.Design/methodology/approachThe authors employ various regression techniques including probit, logit and tobit regression methodologies to study the relationship between litigation risk (contemporaneous measures, litigation dummy) and payout policy (dividend payout likelihood and dividend yield). The authors also conduct several robustness tests.FindingsThe authors find that firms involved in a lawsuit have a lower propensity to distribute dividends to shareholders. In particular, the authors document a negative relationship between litigation risk and payout policy as measured by dividend payout likelihood and dividend yield. The results are robust to a series of robustness tests including using alternate regression specifications, alternate measures of litigation and payout policy, a propensity-score matched sample and using an instrumental variable.Originality/valueThe paper identifies another determinant of payout policy and documents another avenue whereby legal institutions affect corporate payout policy. The link between litigation risk and payout policy is of interest to the business community, financial economists, management and the investing public.

Corporate governance and dividends payout: are they substitutes or complementary?

2015 ◽  
Vol 9 (2) ◽  
pp. 177-194 ◽  
Author(s):  
Samuel Jebaraj Benjamin ◽  
Mazlina Mat Zain
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Negative Relationship ◽  
Board Independence ◽  
Board Meeting ◽  
Dividend Payout ◽  
Content Type ◽  
Significant Negative Relationship ◽  
The Relationship ◽  
Unique Relationship

Purpose – This paper aims to furnish incremental insights on dividends and corporate governance (CG) by addressing the relationship between board meeting frequency and board independence with dividend payout. In particular, this study aims to investigate whether CG attributes are substitutes to control agency problem within the Malaysian context. Design/methodology/approach – This paper examines panel data on a sample of 114 Malaysian firms (798 observations) for seven years from 2002 to 2008. Findings – Based on 798 firm-year observations for the period from 2002 to 2008, the results show significant negative relationship between CG (board independence, board meeting frequency) and dividend payout. This suggests that CG and dividend payout are substitutes in reducing agency costs. Our study provides empirical evidence consistent with the “substitution argument”, indicating that firms with weak CG need to establish reputation by paying more dividends. Specifically, the findings indicate that firms with a higher proportion of independent directors and boards of director that meet more frequent pay lower dividends. Originality/value – This paper provides evidence on previously untested governance characteristics in relation to how they act as substitute mechanisms with dividends for reducing agency costs. The results builds a strong case for the fresh strand of knowledge on dividends and CG which tests each CG variables to understand each of its unique relationship with dividends in line with the dividends outcome or substitute theory.

Reporting of discontinued operations and dividend payout policy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Binod Guragai ◽  
Trent Henke ◽  
Glen Young
Keyword(s):  
Financial Reporting ◽  
Payout Policy ◽  
Ordinary Least Squares ◽  
Dividend Payout ◽  
Content Type ◽  
Different Types ◽  
Prior Literature ◽  
Dividend Increases ◽  
The Relationship ◽  
Discontinued Operations

Purpose This study aims to examine the relationship between the types of discontinued operations (i.e. income-increasing versus income-decreasing) and a firm’s dividend payout policy. The authors extend our analysis to examine whether equity investors react differently to dividend payout changes that are preceded by the reporting of different types of discontinued operations. Design/methodology/approach Ordinary least squares regressions are used to test the association between discontinued operations and dividend payouts. The investor response test uses cumulative abnormal return around the announcement of dividend payout changes. Findings The authors find that firms temporarily increase (decrease) their dividend payout in the quarter following the reporting of income-increasing (income-decreasing) discontinued operations. The authors further find that these results are stronger when the magnitude of the income increase or income decrease is larger and when firms report disposal gains or losses. Although prior literature finds evidence that dividend increases are associated with a significant positive market reaction, the results show that investors do not react positively to dividend increases that are preceded by reporting income-increasing discontinued operations. Originality/value This study adds to the literature on the effects of financial reporting (i.e. the types of discontinued operations) on a firm’s payout policy (i.e. dividend payout). The authors also add to the literature that examines investors’ perceptions of a firm’s payout changes when such changes are transitory in nature.

Exploring the role of corruption and money laundering (ML) on banking profitability and stability: a study of Pakistan and Malaysia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qamar Uz Zaman ◽  
Kinza Aish ◽  
Waheed Akhter ◽  
Syed Anees Haidder Zaidi
Keyword(s):  
Money Laundering ◽  
Random Effect ◽  
Negative Relationship ◽  
Content Type ◽  
Regression Techniques ◽  
Banking Stability ◽  
The Government ◽  
The Stability ◽  
The Relationship

Purpose The purpose of this paper is to address the effect of corruption and money laundering (ML) on banking profitability and stability. Design/methodology/approach This study uses the panel data of 72 banks of Pakistan and Malaysia from 2012–2018. This paper uses fixed effect (FE) and random effect (RE) regression techniques for empirical testing and generalized methods of moment (GMM) technique for robustness tests. Findings This study founds consistent evidence that corruption has a positive and ML has a negative relationship with the banking profitability of Pakistan and Malaysia while the empirical evidence suggests that corruption and ML have a diverse impact on the banking stability of Pakistan and Malaysia. Further, this paper also founds that corruption and ML moderates the relationship between risk and banking profitability and stability. Practical implications The results reveal that the banks of the highly corrupt environment are more affected by corruption and ML than the least corrupt environment. Thus, it is recommended that the Government of Pakistan should formulate strong anti-corruption and anti-money laundering policies. Originality/value As per the knowledge of the authors, this research contributes to understanding the role of corruption and money laundering on the stability and profitability of Pakistan and, in general, it is the first attempt investigating the moderating role of corruption and ML between risk and banking profitability and stability.

The home country boundness of technological resources and internationalization performance

2019 ◽  
Vol 57 (9) ◽  
pp. 2325-2343
Author(s):  
Hee Jin Mun
Keyword(s):  
Home Country ◽  
Negative Relationship ◽  
Limited Range ◽  
High Ratio ◽  
Organizational Slack ◽  
Tobit Regression ◽  
Content Type ◽  
Pharmaceutical Firms ◽  
A Value ◽  
The Relationship

Purpose The purpose of this paper is to investigate the mixed results of the relationship between technological resources and internationalization performance. It argues that a high proportion of technological resources bound to be used in home countries decrease internationalization performance, which is moderated by organizational slack. Design/methodology/approach This study uses data from Korean-listed pharmaceutical firms from 1998 to 2010. Tobit regression is used to test the hypotheses since the dependent variable takes a value within a limited range. Findings The empirical results show that a high ratio of home country-bound technological resources reduces internationalization performance. This negative relationship is reinforced as organizational slack increases. Originality/value This study reveals why technological resources do not always result in effective internationalization. Furthermore, its focus on organizational slack as an intrafirm contingency contributes to recent attempts to reveal organizational slack’s role in internationalization.

Does dividend policy drive repurchases? An empirical study

2015 ◽  
Vol 42 (1) ◽  
pp. 13-22 ◽  
Author(s):  
Nan Liu ◽  
Jamshid Mehran
Keyword(s):  
Design Methodology ◽  
Substitution Effect ◽  
Payout Policy ◽  
Share Repurchases ◽  
Tobit Regression ◽  
Dividend Payout ◽  
Content Type ◽  
Dividend Policies ◽  
Investment Opportunities ◽  
Quarterly Dividend

Purpose – The purpose of this paper is to investigate whether firms repurchase shares to meet or just beat their dividend target as managers perceive share repurchases are more flexible than dividends and managers have a strong desire to maintain dividend levels and dividend payout ratio of the firms. Design/methodology/approach – The authors first run a Tobit regression to examine whether firms meeting or just beating the quarterly dividend per share threshold exhibit unusually high repurchases, controlling for the factors shown to affect repurchases. The authors then calculate abnormal repurchases and compare firms that would otherwise miss the benchmark with other firms. Findings – The authors find that firms meeting or just beating the quarterly dividend per share threshold repurchase more shares than other firms, after controlling for the substitution effect, investment opportunities and financial performance. In addition, firms otherwise missing the quarterly dividend per share threshold repurchase abnormally more shares to meet the threshold. Originality/value – The study contributes to the payout policy literature in the following ways. First, it extends the understanding of the association between dividend payout and repurchase. Second, it contributes to the threshold literature by showing that firms manipulate repurchases in addition to earnings to meet their quarterly dividend per share threshold. Third, it provides support to the survey evidence that firms have a strong desire to maintain their dividend policies.

The impact of product variety on fill rate, inventory and sales performance in the consumer goods industry

2020 ◽  
Vol 31 (7) ◽  
pp. 1481-1505
Author(s):  
Victor Santos ◽  
Mauro Sampaio ◽  
Dario Henrique Alliprandini
Keyword(s):  
Consumer Goods ◽  
Product Variety ◽  
Sales Performance ◽  
Tobit Regression ◽  
Fill Rate ◽  
Content Type ◽  
Regression Techniques ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

PurposeThe impact of product variety decisions on fill rate, inventory and sales performance in a consumer goods company has been examined. From a marketing perspective, it is possible to leverage sales, reach new segments and consequently increase competitiveness when there is a greater product variety on the market. However, operations and logistics professionals indicate potential impacts on the supply chain, such as production, storage and distribution complexity. The nature of the product variety-cost-sales performance relationship is not clear, and empirical evidence about whether and how operations cost and sales performance increases with variety is inconclusive.Design/methodology/approachThe multiple linear regression and the Tobit regression techniques were applied over a seven-year horizon of data from a business intelligence platform of a consumer goods company.FindingsOur results show that sales performance is negatively associated with product variety. The total effect of product variety on sales performance has been examined, including both the direct effect and the indirect effect through inventory and fill rate. Therefore, the findings provide a comprehensive understanding of the impact of product variety on operations and sales performance.Originality/valueSeveral studies have researched the impact of product variety on fill rate, inventory and sales performance separately; however, the research of the impact and the relationship of these factors is scarce and limited.

scholarly journals TAX AVOIDANCE, RELATED PARTY TRANSACTIONS, CORPORATE GOVERNANCE AND THE CORPORATE CASH DIVIDEND POLICY

2017 ◽  
Vol 32 (3) ◽  
pp. 190
Author(s):  
Dewi Kartika Sari ◽  
Sidharta Utama ◽  
Hilda Rossieta
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Payout Policy ◽  
Cash Dividend ◽  
Dividend Payout ◽  
Related Party Transactions ◽  
Dividend Payments ◽  
The Relationship

This study aims to investigate the relationship between tax avoidance, related party transactions and the corporate dividend policy. Furthermore, this study will also investigate the moderating effects of the implementation of Corporate Governance (CG) on the relationship between tax avoidance, Related Party Transactions (RPT) and corporate dividend policies. Our sample covers companies listed on the Indonesian Stock Exchange during 2011-2014. The results provide moderate support for the proposed hypotheses. First, the greater tax avoidance that a company makes will increase the size of the firm's RPT. Second, the higher that the company's RPT is, this will lower the company's cash dividend payout rate. Third, the greater the tax avoidance is, the lower the company's cash dividend payout rate will be, which is done through a related party transaction.Fourth, the impact of the implementation of strong CG will weaken the positive relationship between corporate tax avoidance and the company’s RPT size, strengthen the negative relationship between the RPT’s size and the cash dividend payout policy of the firm, and strengthen the negative relationship between the company’s tax avoidance and the company's cash dividend payout policy which is mediated by the company’s RPT. This study makes three contributions. First, this study shows an indirect relationship between tax avoidance and cash dividend payments, mediated by RPT. Second, this study tries to examine the effect of CG’s moderation on the relationship between tax avoidance and RPT, as well as the effect of CG’s moderation on the relationship between tax avoidance and cash dividend payments, mediated by RPT. Third, this study developed RPT measurements by looking at the RPT’s components more specifically (looking at components of transactions outside of the main business of the company - the "others" component).

Litigation risk and working capital

2019 ◽  
Vol 45 (1) ◽  
pp. 88-102 ◽  
Author(s):  
James Malm ◽  
Nilesh Sah
Keyword(s):  
Business Community ◽  
High Tech ◽  
Litigation Risk ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Content Type ◽  
Cash Conversion Cycle ◽  
Regression Techniques ◽  
Financial Decision

Purpose The purpose of this paper is to understand the association between litigation risk and working capital management. Design/methodology/approach The authors employ four different regression techniques (OLS regressions, regressions with industry and time controls, median regressions, and Fama Macbeth regressions) to study the relation between litigation risk (contemporaneous and lagged measures) and working capital management (cash conversion cycle (CCC) and its components). The authors also conduct numerous robustness tests. Findings The authors find that high-litigation risk firms tend to have longer CCC. Decomposing CCC into days receivable outstanding, days inventory outstanding and days payable outstanding, the authors find that high-litigation risk firms have longer receivable periods, take a longer time to convert inventory to cash and do not pay their suppliers promptly. These results are robust to a series of robustness tests including using an alternate measure of working capital and accounting for firm type (high-tech vs labor intensive). Originality/value This paper contributes in several ways to the litigation and corporate finance literature. The authors identify another determinant of working capital management and document another avenue whereby legal institutions affect short-term financial decision making. The link between litigation risk and working capital management is of interest to the business community, financial economists, management and the investing public.

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.

I'll manage myself: the moderator effect of positive framing on the relationship between organisational politics and engagement

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Robinson James
Keyword(s):  
Work Engagement ◽  
Structural Equation ◽  
Harmful Effect ◽  
Negative Relationship ◽  
Partial Least Square ◽  
Least Square ◽  
Moderator Effect ◽  
Content Type ◽  
The Relationship ◽  
Organisational Politics

PurposeThis study aims to investigate the influence of organisational politics on work engagement and the moderator effect of positive framing on this relationshipDesign/methodology/approachData were collected from 241 public sector employees in Sri Lanka through a structured questionnaire and analysed with partial least square structural equation modelling (PLS_SEM).FindingsThe results indicated that organisational politics negatively influenced employees' work engagement, positive framing positively influenced engagement and weakened the negative relationship between politics and engagement.Practical implicationsThis study suggests that organisation and individuals must take the necessary steps to enhance work engagement. Organisations must be transparent in all activities to avoid employees' negative perception. Also, organisations need to take steps to recruit employees with positive framing or develop this competency through training and development. Individuals also need to take necessary steps to frame the work environment positively to enhance their engagement in work.Originality/valueThis study extends the literature by being the first to examine the positive framing as a moderator in the relationship between politics and engagement. This study found that positive framing as a resource reduced the harmful effect of organisational politics on engagement and suggested positive framing can be considered as a resource in the future investigation of the job demand–resource model.

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