Institutional Ownership and Dividend Payout in Emerging Markets: Evidence from India

2018 ◽  
Vol 17 (1_suppl) ◽  
pp. S54-S82 ◽  
Author(s):  
Chacko Jacob ◽  
Jijo Lukose P.J.
Keyword(s):  
Institutional Investors ◽  
Positive Relationship ◽  
Institutional Ownership ◽  
Jel Classification ◽  
Large Firms ◽  
Dividend Payout ◽  
Financial Firms ◽  
The Us ◽  
Propensity To Pay ◽  
The Relationship

We examine the relationship between institutional investor ownership and dividend payouts using a large sample of NSE-listed non-financial firms during the period 2001 to 2016. Consistent with the evidence from the US market, institutional investors, on average, have larger holdings in dividend-paying firms and are seen to prefer dividend payers over non-payers among larger firms. However, among smaller firms, institutional investors seem to prefer non-paying firms. Consistent with it, logistic regression results reveal that institutional investors do improve a firms’ propensity to pay dividends, primarily across large firms. Further, among dividend-paying firms, institutional investors, on average, are observed to have relatively lesser holdings in firms with higher payouts than those with lower payouts. In line with these observations, regression analysis also provides no evidence to support a positive relationship between total institutional ownership and payout level. However, across investor categories, we do find evidence for domestic institutional investors (DII) in improving payouts. Further, we use a dynamic panel GMM estimator to correct for endogeneity and find that the relationship is robust among large firms. Our results highlight the role of DII in improving dividend payout and provide support to models that predict a positive relationship. JEL Classification: G23, G32, G34, G35

scholarly journals Dividend Policy and Institutional Holdings: Evidence from Australia

2020 ◽  
Vol 8 (1) ◽  
pp. 12
Author(s):  
Thao Nguyen ◽  
Hui Li
Keyword(s):  
Panel Data ◽  
Institutional Investors ◽  
Institutional Ownership ◽  
Dividend Yield ◽  
Dividend Payout ◽  
Multivariate Tests ◽  
Listed Firms ◽  
Insignificant Effect ◽  
Institutional Holdings ◽  
The Relationship

This paper investigates the relationship between dividend payout and institutional ownership for all Australian listed firms in the period between 2001 and 2015. In our univariate tests, we find that institutional investors, in general, prefer dividend-paying firms more than non-paying firms, and for the dividend-paying firms in our sample, institutional investors hold more shares in the firms who pay higher dividends. We further explore the causality between dividend payout and institutional ownership in our multivariate tests with our panel data. The results show an insignificant effect of institutional ownership (dividend payout) on the future dividend payout (institutional ownership) while controlling for firms’ fundamentals, that a higher dividend yield does not attract more institutional investors and that there is no catering to Australian institutional investors.

scholarly journals Has the Propensity to Pay Dividends Declined? Evidence from the US Banking Sector

2021 ◽  
Vol 14 (3) ◽  
pp. 103
Author(s):  
Shaojie Lai ◽  
Qing Wang ◽  
Jiangze Du ◽  
Shuwen Pi
Keyword(s):  
Banking Sector ◽  
Logit Models ◽  
Sample Period ◽  
Financial Firms ◽  
The Us ◽  
The Difference ◽  
High Level ◽  
Propensity To Pay ◽  
Financial Firm ◽  
Very High

This article examines the propensity to pay dividends in the U.S banking sector during 1973–2014. Although the propensity to pay dividends has been declining over the 52 years of our sample period, banks are consistently more likely to pay dividends than non-financial firms. Using the coefficients from logit models estimated early in the sample period to forecast the percentage of dividend payers in each subsequent year, we conclude that there has been a decline in the likelihood of paying dividends in the banking sector. However, the decline started from a very high level as compared to that of the non-banking sectors. In addition, the variables taken from the non-financial firm literature do not explain the difference between the actual and expected percentage of dividend payers in the banking sector. We also conduct exploratory analyses with bank-specific variables. Although newly included variables are significantly related to the likelihood of paying dividends, they do not explain the declining propensity to pay dividends in the banking sector.

The Relation Between Stock Repurchase And Ownership Structure In France

2013 ◽  
Vol 3 (2) ◽  
pp. 149
Author(s):  
Rim El Houcine ◽  
Adel Boubaker
Keyword(s):  
Ownership Structure ◽  
Institutional Investors ◽  
Positive Relationship ◽  
Stock Repurchase ◽  
Interest Alignment ◽  
The Relationship

The aim of this article is to study the relationship between the type of shareholders of French companies and their stock repurchase policy. According to the financial theory, the presence of institutional investors negatively influences the policy of purchasing the fact of preference of these investors over the reinvestment projects. The theoretical hypotheses of interest alignment and entrenchment have been used to justify the relationship between management stockholding and repurchasing policy. We have tested the validity of our hypotheses on a sample of 77 French companies during 2003-2008. The results have shown that the institutional investors affect negatively the repurchase, which can explain the priority of these latter for dividends compared to repurchasing and with holding the profit to invest it again. Moreover, we have found a positive relationship between the management stockholding and the repurchase, which has been explained by the power of entrenchment that can perform the repurchase by raising the stockholding percentage of managers who repurchase the stocks.

Corporate governance and turnaround: Evidence from Australia

2020 ◽  
Vol 45 (4) ◽  
pp. 549-578
Author(s):  
Seema Miglani ◽  
Kamran Ahmed ◽  
Darren Henry
Keyword(s):  
Institutional Ownership ◽  
Jel Classification ◽  
Board Independence ◽  
Outside Directors ◽  
Firm Level ◽  
Corporate Turnaround ◽  
Outside Director ◽  
Director Ownership ◽  
The Relationship ◽  
Matched Samples

We examine the relationship between ownership and outside director attributes and corporate turnaround outcomes using matched samples of 99 turnaround and 99 non-turnaround listed Australian firms during the 2004–2015 period. Based on agency theory principles, we propose that key shareholder groups (block ownership, director ownership, institutional ownership) and outside directors are related to firm-level turnaround outcomes, and particularly changes in these attributes across decline to turnaround periods. Our results provide evidence that turnaround and non-turnaround firms differ in terms of their ownership and board composition structures, and that changes in director ownership and the degree of board independence are important in determining the likelihood of turnaround success. JEL Classification: G33, G34, M40

scholarly journals PENGARUH STRUKTUR KEPEMILIKAN TERHADAP KEBIJAKAN DIVIDEN PADA PERUSAHAAN MANUFAKTUR

2016 ◽  
Vol 12 (2) ◽  
pp. 167
Author(s):  
Evy Sumartha
Keyword(s):  
Regression Analysis ◽  
Ownership Structure ◽  
Dividend Policy ◽  
Control Variable ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Company Size ◽  
Dividend Payout ◽  
Negative Effect ◽  
The Relationship

Abstrak: Pengaruh Struktur Kepemilikan Terhadap Kebijakan Dividen pada Perusahaan Manufaktur. Struktur kepemilikan sebagai variabel independen dalam penelitian ini diproksikan dengan kepemilikan institusional dan kepemilikan manajerial. Penelitian ini juga untuk mendapatkan bukti mengenai fungsi moderasi dari konsentrasi kepemilikan dalam hubungan antara struktur kepemilikan dan kebijakan dividen. Variabel dependen adalah kebijakan dividen yang diukur dengan Dividend Payout Ratio (DPR). Sampel yang diperoleh sebanyak 97 perusahaan selama tahun pengamatan. Pengujian hipotesis dilakukan dengan Moderating Regression Analysis dan analisis regresi data panel. Hasilnya menunjukkan bahwa konsentrasi kepemilikan berfungsi sebagai variabel moderating pada hubungan antara struktur kepemilikan dan kebijakan dividen. Untuk kepemilikan institusional pada perusahaan yang tidak mempunyai kepemilikan manajerial berpengaruh negatif terhadap Dividend Payout Ratio, sedangkan kepemilikan institusional pada perusahaan yang mempunyai kepemilikan manajerial berpengaruh positif. Kepemilikan manajerial berpengaruh positif terhadap Dividend Payout Ratio. Variabel kontrol profitabilitas dan ukuran perusahaan berpengaruh pula terhadap kebijakan dividen perusahaan. Kata Kunci: konsentrasi kepemilikan, kepemilikan institusional, kepemilikan manajerial, ROA, ukuran perusahaan, dividend payout ratio Abstract: Pengaruh Struktur Kepemilikan Terhadap Kebijakan Dividen pada Perusahaan Manufaktur Ownership structure; as independent variables in this research; is represented by institutional ownership and managerial ownership. This research also aimed to obtain evidence of moderation function of the concentration of ownership in the relationship between ownership structure and dividend policy. The dependent variable is dividend policy which is measured by Dividend Payout Ratio (DPR). There are 97 sample companies. Hypothesis testing is done by Moderating Regression Analysis (MRA) and panel regression analysis. The results of this research show that the concentration of ownership serves as a moderating variable on the relationship between ownership structure and dividend policy. Institutional ownership in companies that do not have a managerial ownership has a negative effect on Dividend Payout Ratio; while institutional ownership in companies that have a managerial ownership has a positive effect on Dividend Payout Ratio. Profitability and company size as a control variable has effect on dividend policy. Keywords: the concentration of ownership, institutional ownership, managerial ownership, ROA, company size, dividend payout ratio

scholarly journals The Relationship between Ownership Structure and Dividend Policy: An Application in Vietnam Stock Exchange

2019 ◽  
Vol 8 (2) ◽  
pp. 131-146
Author(s):  
Thi Xuan Anh Tran ◽  
Quoc Tuan Le
Keyword(s):  
Ownership Structure ◽  
Institutional Investors ◽  
Stock Exchange ◽  
Payout Policy ◽  
Ownership Concentration ◽  
H Index ◽  
Dividend Payout ◽  
Listed Firms ◽  
Ownership Composition ◽  
The Relationship

Abstract This research examines the possible association between ownership structure and Vietnam listed companies’ dividend payout policy over the period of 2009 – 2015. We have investigated 642 listed firms in Hochiminh stock exchange and Hanoi stock exchange, using pannel data analysis. Ownership structure is described with two main sub-variables: ownership concentration and ownership composition. Specifically, the Herfindahl index (or H-index) was applied to measure the level of ownership concentration /dispersion for all major shareholders in the company, including the five biggest investors, corporate institutional investors, the ownership concentration level, and foreign investors. It has been observed that the H-index of all major shareholders has an average of less than 0.5 but the value of the H-index of institutional investors at 0.594 indicates that institutional investors are more likely to be concentrated in the hands of large institutional investors. The result showed linear relationship between institutional ownership and the dividend rate, but not statistically significant for the relationship between managerial ownership and dividend payout ratio.

Corporate social responsibility and dividend policy: a strategic choice in family firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Fayyaz Sheikh ◽  
Aamir Inam Bhutta ◽  
Bareera Rehman ◽  
Muhammad Bazil ◽  
Ali Hassan
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Dividend Policy ◽  
Family Firms ◽  
Family Members ◽  
Dividend Payout ◽  
Content Type ◽  
Corporate Social ◽  
Propensity To Pay ◽  
The Relationship

PurposeThe purpose of this study is to examine whether corporate social responsibility (CSR) affects dividend policy (the propensity to pay dividends as well as the dividend payout ratio) and what role family ownership plays in this regard in an emerging market.Design/methodology/approachThe study uses a sample of 1,480 observations from Pakistan for the period 2010–2016 and accounts for Hackman self-selection bias and endogeneity issues using a robust regression analysis. CSR activity is measured by CSR score developed through a content analysis of firms' annual reports.FindingsThe study finds that the greater number of CSR activities increases the propensity to pay dividends, but reduces the dividend payout in dividend-paying firms. On the other hand, in family firms, the greater number CSR activities decreases the propensity to pay dividends, but increases the dividend payout in dividend-paying firms. The findings hold for a series of robustness and sensitivity checks, for example, alternative measures, specifications and estimators.Practical implicationsA trade-off between firms' CSR activities and dividend policy needs to be the point of concern for investors, minority shareholders and policy makers. The role of the non-executive and independent directors becomes more important, especially in the family firms where family members sitting on the boards may drive CSR activities in their own interests opportunistically. The potential opportunistic behaviour of family members warrants the need for policy reform initiatives to strengthen the protection of other stakeholders' interests.Originality/valueThe study highlights that family owners' efforts to preserve their socio-emotional wealth in family firms affect the relationship between CSR activities and dividend policy. Further, the relationship between CSR and dividend policy in emerging markets is different from developed markets. This study simultaneously focuses on both the propensity to pay dividends and the amount of dividend payment and documents that the implications of CSR are different for them.

scholarly journals Liquidity, Growth and Profitability of Non-financial Public Listed Malaysia: A Malaysian Evidence

2019 ◽  
Vol 10 (3) ◽  
pp. 194
Author(s):  
Mazurina Mohd Ali ◽  
Nik Noor Ayu Nik Hussin ◽  
Erlane K Ghani
Keyword(s):  
Firm Growth ◽  
Positive Relationship ◽  
Negative Relationship ◽  
Sustainable Growth ◽  
Return On Equity ◽  
Listed Firms ◽  
Financial Firms ◽  
Strong Positive Relationship ◽  
Sustainable Growth Rate ◽  
The Relationship

This study examines the relationship between liquidity, growth and profitability of non-financial firms listed on the Bursa Malaysia. Specifically, this study examines the relationship between liquidity and growth on profitability for 50 non-financial public listed firms in Malaysia. Using panel data technique on 250 observations across a five-year period, this study shows that liquidity has a strong positive relationship with profitability in terms of return on asset of the firms. However, liquidity in terms of quick ratio has no impact on profitability. This study also shows that firm growth in terms of sales growth has a negative relationship with profitability. However, this study shows that liquidity and growth in general do not influence profitability in terms of return on equity, although the result shows that sustainable growth rate has a positive relationship on profitability. This study highlights the importance of these measures in measuring performance. The findings in this study provide guidelines to the firms on the measures that best to be used in evaluating performance so that appropriate strategies can be adopted to increase performance.

scholarly journals Effect of Leverage on Real Earnings Management: Evidence from Korea

2020 ◽  
Vol 12 (6) ◽  
pp. 2232
Author(s):  
Ana Belen Tulcanaza-Prieto ◽  
Younghwan Lee ◽  
Jeong-Ho Koo
Keyword(s):  
Earnings Management ◽  
Stock Price ◽  
Positive Relationship ◽  
Financial Statements ◽  
Least Square ◽  
Real Earnings Management ◽  
Fiscal Year ◽  
Financial Firms ◽  
The Relationship

This study examines how leverage affects real earnings management (REM) in non-financial firms listed on the Korea Composite Stock Price Index from 2010 to 2018 by employing total, short-term, and long-term debt ratios (i.e., leverage) as independent variables and four REM metrics as dependent variables. We find a significant positive relationship between leverage and REM in suspicious firms, whereas the effect of leverage is insignificant in non-suspicious firms. We also find that the positive relationship between both variables is stronger in the second half of the fiscal year, which shows the prevalence of the seasonality of REM, as managers collect high-frequency financial information during this period. These findings are consistent with those in the literature that managers increase firm leverage and REM activities to reduce their probability of being discovered, since financial statements in the interim quarters are not often audited. Our study complements the literature by introducing quarterly data to identify clearly REM activities and detect the strongest effect on the relationship between REM and leverage. Moreover, our results from the two-stage least square (2SLS) regression analysis are consistent with our previous findings.

scholarly journals Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

2021 ◽  
Author(s):  
Othar Kordsachia ◽  
Maximilian Focke ◽  
Patrick Velte
Keyword(s):  
Institutional Investors ◽  
Environmental Performance ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Research Area ◽  
Business Practices ◽  
Responsible Investment ◽  
Green Business ◽  
The Relationship

AbstractIn light of current climate change discussions, this paper analyzes the effect of ownership structure on a firm’s environmental performance with a subsequent focus on corporate emission reduction. Based on a cross-national European sample consisting of 7384 firm-year observations between 2008 and 2017, this study explores the relationship between sustainable institutional investors and environmental performance. In line with prior research and embedded in an agency theoretical framework, the nature of institutional investors may act as a stimulating driver towards green business practices. Sustainable institutional investors are defined based on their signatory status to the UN Principles for Responsible Investment and their (long-term) investment horizons. The first classification stems from a content-driven sustainability perspective, while the second is derived from temporal sustainability. The results indicate that sustainable institutional ownership is positively associated with a firm’s environmental performance. Further investigations reveal that sustainable institutional investor ownership is also positively associated with firms’ willingness to respond to the Carbon Disclosure Project. These results indicate a higher carbon-risk awareness in firms with greater sustainable institutional investor ownership. Our paper significantly contributes to prior empirical research on institutional ownership and environmental performance and offers useful theoretical and practical implications. It focusses on a still-underdeveloped research area, namely organizations and their relationships with the natural environment, including institutional equity ownership as a driver towards greener practices on a corporate level.

Sign in / Sign up

Export Citation Format

Share Document