scholarly journals The influence of financial constraint on peer influence of cash dividend decision – Evidence from China

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Xiaolan Wang ◽  
Fengzuo Li ◽  
Mohammad Salem
Keyword(s):  
Peer Influence ◽  
Financial Constraints ◽  
Dividend Policy ◽  
Factor Model ◽  
Marginal Effect ◽  
Financial Constraint ◽  
Cash Dividend ◽  
Peer Effect ◽  
Level 3

Abstract We analyse the influence of financial constraints on the peer effect of dividend decision in China by employing the Carhart four-factor model to construct instrument variables of peer influence. We find that (1) the decision of whether to pay cash dividends (DIV) is significantly influenced by peers, and the estimated marginal effect is 0.53%, but the question of whether to pay catering dividends and the extent of such dividends to be paid are not significantly affected by peers. (2) Under the semi-mandatory dividend policy in China, financial constraints will significantly reduce peer influence on the dividend level. (3) Peer influence on DIV is more pronounced among companies that face high financial constraints.

Does earnings transparency affect corporate payout decisions?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yogesh Chauhan ◽  
Rajesh Pathak
Keyword(s):  
Path Analysis ◽  
Fixed Effects ◽  
Financial Constraints ◽  
Dividend Policy ◽  
Cash Dividend ◽  
Content Type ◽  
Listed Firms ◽  
Panel Data Estimation ◽  
Signaling Hypothesis ◽  
Data Estimation

PurposeThe paper examines how earnings transparency affects dividend payouts for Indian firms. The authors also explore the channels through which earnings transparency affects dividend payouts.Design/methodology/approachThe authors employ panel data estimation with fixed effects to examine the role of earnings transparency on dividend payouts. The authors also use path analysis to explore causation. The paper uses a sample of more than 2000 Indian listed firms, over the period 2001–2016.FindingsThe authors report that firms showing grater earning transparency pay more cash dividend. Their results do not support the signaling hypothesis about the dividend. However, these results provide explicit support to the theory that corporate dividend policy is an outcome of information asymmetry. Moreover, the path analysis reveals the effect of earnings transparency on corporate payout through the financial constraint channel. The results are robust to idiosyncratic controls; alternate measures of payout; alternate models; endogeneity concerns; and the alternate channel of returning money to stockholders.Practical implicationsManagers should also examine earnings transparency while formulating an adequate dividend policy for their firms. This study also helps investors to identify dividend-paying stocks.Originality/valueThis study particularly contributes to the literature examining the effect of earnings quality on dividend payouts through its effect on financial constraints. We, therefore, connect two streams of research that contemplate the relation between accounting-based information variables and dividend payouts and the relationship between financial constraints and dividend payouts. Moreover, using path analysis uniquely, the authors provide evidence on the relative importance of both the direct and the indirect link.

scholarly journals Financial constraint, trust, and export performances: firm-level evidence from Africa

2021 ◽  
pp. 1-23
Author(s):  
Maty Konte ◽  
Gideon Ndubuisi
Keyword(s):  
Financial Constraints ◽  
Interpersonal Trust ◽  
Negative Relationship ◽  
Financial Constraint ◽  
African Countries ◽  
Firm Level ◽  
Country Level ◽  
The World Bank ◽  
Negative Effect ◽  
Enterprise Surveys

Abstract Several existing studies have documented a negative relationship between firm financial constraint and export activities but do not attempt to examine factors that could attenuate this relationship in Africa. In this paper, we examine the effect of financial constraint on exports in Africa and explore how the level of trust in countries where firms are located shapes this relationship. We combine the World Bank Enterprise Surveys with different measures of country-level personal and interpersonal trust computed from the Afrobarometer surveys of 19 African countries. Our results show that financial constraints negatively affect export activities. However, this negative effect is attenuated for firms that are located in trust-intensive societies. These findings are robust to different specifications. Interestingly, we find that small and medium-sized enterprises in Africa are more likely to be affected by financial constraints but also more likely to benefit from a higher level of both personal and interpersonal trust, while for larger firms only interpersonal trust matters.

Using 10-K Text to Gauge Financial Constraints

2015 ◽  
Vol 50 (4) ◽  
pp. 623-646 ◽  
Author(s):  
Andriy Bodnaruk ◽  
Tim Loughran ◽  
Bill McDonald
Keyword(s):  
Capital Structure ◽  
Financial Constraints ◽  
Securities And Exchange Commission ◽  
Financial Constraint ◽  
Firm Characteristics ◽  
Low Correlation ◽  
Highly Correlated ◽  
Firm Attributes ◽  
The U.S ◽  
Better Than

AbstractMeasuring the extent to which a firm is financially constrained is critical in assessing capital structure. Extant measures of financial constraints focus on macro firm characteristics such as age and size, variables highly correlated with other firm attributes. We parse 10-K disclosures filed with the U.S. Securities and Exchange Commission (SEC) using a unique lexicon based on constraining words. We find that the frequency of constraining words exhibits very low correlation with traditional measures of financial constraints and predicts subsequent liquidity events, such as dividend omissions or increases, equity recycling, and underfunded pensions, better than widely used financial constraint indexes.

scholarly journals Return on Equity as the Leading Indicator of Dividend Payout Ratio of Jakarta Islamic Index Stocks Listed on the Indonesia Stock Exchange

2020 ◽  
Vol 1 (3) ◽  
pp. 319-330
Author(s):  
Endi Trimawan Budianto ◽  
Eka Bertuah Eka Bertuah
Keyword(s):  
Stock Price ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Cash Dividend ◽  
Dividend Payout ◽  
Return On Equity ◽  
Company Stock ◽  
Financial Condition ◽  
Main Indicator ◽  
Retained Earnings

Dividend policy is a critical and imperative decision because it involves the shareholders interest’s and has a significant impact to company's sustainability. Sartono (2010) states that dividend policy is a decision whether the profits obtained by the company will be distributed to shareholders as dividend or will be held in the form of retained earnings for future investment.Brigham and Gapenski (2006) state that investor’s main purpose when investing their fund is to gain income or return either as dividend yield or as capital gain. On the other side, the company who will share the dividend will be faced with various consideration: the urge to retain some profit for a more promising re-investment, the company funding, company liquidity, shareholder’s characteristic, specific target related to dividend payment ratio, and other factors related to dividend policy.Based on the definition mentioned above, it can be concluded that dividend policy is influenced by two conflicting interests; the shareholders interest with their dividend and the company interest to do re-investment by retaining the profit. Therefore, dividends paid will depend on each company’s considerations.In general, the shareholders wish to have a relatively stable dividend share to minimize the uncertainty of expected investment result and to increase the shareholder’s trust toward the company so that the stock value will rise. The company dividend policy can be reflected by the Dividend Payout Ratio (DPR), which is the profit percentage shared in the form of cash dividend. It means that the size of the DPR, either big or small, will affect the shareholder’s decision and to the contrary it will also affect the company financial condition. Improper decisions will potentially envisage company facing funding difficulties in the future.According to Brigham and Gapenski (2006), the optimum dividend policy is the dividend policy which creating balance between the current dividend and its growth in the future so the company stock price can be maximized.Lintner (1956) argue that the company ability to gain profit is the main indicator of the company ability to pay dividend. So, the profitability is the most determining factor toward dividend. But some other research mention that the companies tend to choose new investment instead of paying high dividend if their condition are great, well-developed and have high profitability.The rapid growth of Islamic Finance become the first-rate consideration of choosing Jakarta Islamic Index stocks as the object research in which this research aimed to improve investor’s understanding related to dividend policy of sharia stocks member of Jakarta Islamic Index.

scholarly journals CASH FLOW, PROFITABILITY, LIQUIDITY AND INVESTMENT IN INDONESIA WITH FINANCIAL CONSTRAINT AS VARIABLE MODERATING

2020 ◽  
Vol 5 (1) ◽  
pp. 61-74
Author(s):  
Ibnu Damanudin ◽  
Risal Rinofah
Keyword(s):  
Cash Flow ◽  
Financial Constraints ◽  
Stock Exchange ◽  
Total Sample ◽  
Financial Constraint ◽  
Moderating Variables ◽  
Analysis Technique ◽  
Food And Beverage ◽  
Positive Effect ◽  
Observation Period

The purpose of this study is to determine the sensitivity of cash flow, profitability, liquidity, on investments with financial constraints as moderating variables. In manufacture company food and beverage sub-sector company for the period 2015-2018. The population in this study are all food and beverage sub-sector companies listed on the Indonesia Stock Exchange. The observation period used are 2015-2018 or 4 years. The sample is using purposive sampling method, so that a total sample of 10 samples was obtained multiplied by the observation period for 4 years to 40 research data. Data analysis technique used is multiple linear analysis method with a significant level of 5% (0.05). The results of this study indicate that cash flow and liquidity are not reflected on investments. While the profitability variable has a significant positive effect on investment. Different results are billed when cash flow and liquidity are moderated by financial constraints, cash flow and liquidity have a greater effect on non-financial constrained companies. While profitability does not have a different effect on financial constraint or unconstraint companies

The impact of inventory productivity on new venture survival

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yu Lin ◽  
Jiannan Wang ◽  
Yingjie Shi
Keyword(s):  
Financial Constraints ◽  
Failure Time ◽  
Performance Indicator ◽  
Marginal Effect ◽  
Industrial Firms ◽  
Content Type ◽  
Aft Model ◽  
Annual Survey ◽  
Inherent Nature ◽  
The Impact

PurposeThis paper explores the relationship between inventory productivity and the likelihood of venture survival and then examines how financial constraints moderate the inventory productivity–survival linkage.Design/methodology/approachAccelerated failure time (AFT) model is employed to study the link between inventory productivity and venture survival by using small- and medium-sized enterprise (SME) data from Chinese Annual Survey of Industrial Firms (CASIF) database over the period 1999–2007.FindingsThe paper demonstrates a converse U-curve relation between inventory productivity and venture survival. Additionally, financial constraints as the moderator weaken the marginal effect of inventory productivity on venture survival.Practical implicationsManagers should pay more attention to the important inventory performance indicator: inventory productivity. In the context of prominent financing difficulties, managers should be rapid to adjust the competitive strategy and optimize the internal production process according to the inherent nature of risks in a friction environment, and thus generate resources that enterprises cannot raise in the financial market.Originality/valueThis study may be the first to practically investigate the role of inventory productivity on venture survival and the moderating effect of financing constraints on this relationship. It adds to abundant articles as regards the interface between operation management and venture survival by exploring how financial constraints moderate the inventory productivity–survival linkage.

Financial constraints and marketing investment: evidence from text analysis

2020 ◽  
Vol 54 (3) ◽  
pp. 525-545 ◽  
Author(s):  
Sagarika Mishra ◽  
Mike T. Ewing
Keyword(s):  
Financial Constraints ◽  
Ordinary Least Squares ◽  
Mediating Effect ◽  
Financial Constraint ◽  
Content Type ◽  
Specific Analysis ◽  
Intangible Investments ◽  
Negative Effect ◽  
Brand Capital ◽  
Intangible Investment

Purpose The purpose of this study to examine the effect of financial constraint on intangible investment because intangible investment provides an overall picture of marketing investment and activity. Intangible investment also plays a significant role in facilitating future sales. Using a new measure of intangible investment (Peters and Taylor, 2017), the authors first establish that intangible investment is positively related with future sales. Then, using a new text-based measure of financial constraint, the authors show that financial constraint has a significant negative effect on future intangible investments after controlling for other factors. Intangible investment has three components. The first is R&D, the second is 30 per cent of selling and general administrative expense (SGA) and the third is other intangibles. The authors find that the negative and significant effect of financial constraint on 30 per cent SGA is stronger. This indicates that financially constrained firms reduce marketing related investments. The authors then considered firm size and found that smaller firms facing financial constraint continue to increase their intangible investments, whereas larger firms reduce their intangible investment. As a robustness test, the authors use advertising expenditure as a measure of promotion related investment and find that financial constraint has a negative effect on advertising spending. The authors then use two traditional measures of financial constraint in their analysis to compare with the new text-based measure. Design/methodology/approach The authors use ordinary least squares with cluster robust standard error to conduct their empirical analysis. Findings First the authors establish that intangible investment positively affects future sales. Further the authors find that financial constraint negatively affects intangible investment. Moreover, financial constraint negatively affects the brand capital of intangible investment. Research limitations/implications The authors did not conduct any industry specific analysis to see how financial constraints affect intangible investment across different industries. Industry specific analysis is important because in some industries/sectors intangibles are clearly more important than in others, so this is an important avenue for future research. It will also be interesting to explore if and how financial constraint has a mediating effect on sales growth via intangible investment and different components of intangibles. Practical implications This study identifies another important factor that can negatively affect brand capital investment. Originality/value The authors have used a measure of financial constraint and text mined all the annual reports of US firms for the period of 1994-2016 to compute this measure.

Indicating restaurant firms’ financial constraints: a new composite index

2019 ◽  
Vol 31 (4) ◽  
pp. 2014-2031
Author(s):  
Sung Gyun Mun ◽  
SooCheong (Shawn) Jang
Keyword(s):  
Fixed Effects ◽  
Financial Constraints ◽  
Composite Index ◽  
Cash Flows ◽  
Percentage Change ◽  
Capital Investments ◽  
Financial Constraint ◽  
Content Type ◽  
Fixed Assets ◽  
Restaurant Firms

Purpose The purpose of this study is to develop an index for financial constraints, specifically for restaurant firms, and to further validate the developed financial constraint index. Design/methodology/approach This study used logistic regression with a composite criterion based on the dividend payout ratio, KZ index and Cleary index to estimate restaurant firms’ financial constraints. Then, a fixed-effects regression was used to verify the validity of the measurement of restaurant firms’ financial constraints. Findings A restaurant firm’s operating profit, financial leverage, asset tangibility, sale of fixed assets and percentage change in number of employees are critical indicators for identifying financial constraints. The results indicated that in cases with positive operating cash flows, the effect of operating cash flow on capital investments continuously decreased as restaurant firms’ financial constraints increased. Originality/value This study is unique in that the specific financial and operational characteristics of restaurant firms were included in the model to determine financial constraint indicators, such as sale of fixed assets and percentage change in number of employees.

scholarly journals Ukuran Perusahaan Memoderasi Pengaruh Free Cash Flow dan Leverage Terhadap Kebijakan Dividen

2019 ◽  
pp. 484
Author(s):  
I Kadek Edi Rian Trisna ◽  
Gayatri Gayatri
Keyword(s):  
Cash Flow ◽  
Firm Size ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Cash Dividend ◽  
Optimal Dividend ◽  
Current Growth ◽  
Optimal Dividend Policy ◽  
A Company

Determining the optimal cash dividend policy a company should consider several factors. An optimal dividend policy is required because it can create a balance between dividends and current growth in the next period. The purpose of this study is to obtain empirical evidence on the effect of free cash flow and leverage on dividend policy and firm size capability in moderating the effect of free cash flow and leverage against dividend policy. Companies going public listed on the Indonesia Stock Exchange (BEI) year 2013-2017 is the location of research with purposive sampling as a method of determining the sample. Companies that meet the criteria are 10 companies with a total of 39 observations. Moderated Regression Analysis (MRA) was used to test in this research. The result showed that free cash flow had positive and leverage effect negatively on dividend policy. The study also found that firm size is able to strengthen the effect of free cash flow on dividend policy and weaken the influence of leverage on dividend policy. Keywords: dividend policy, free cash flow, leverage, company size..  

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