Discontinued Operations and Dividend Payout Policy.

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.

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Insider Trading Law Enforcement and Dividend Payout Policy

SSRN Electronic Journal ◽

10.2139/ssrn.2023796 ◽

2012 ◽

Author(s):

Paul Brockman ◽

Jiri Tresl ◽

Emre Unlu

Keyword(s):

Law Enforcement ◽

Insider Trading ◽

Payout Policy ◽

Dividend Payout

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Corporate Innovation and Dividend Payout Policy: Evidence From China’s Listed Companies

IEEE Access ◽

10.1109/access.2021.3072906 ◽

2021 ◽

Vol 9 ◽

pp. 61090-61100

Author(s):

Liping Liao ◽

Kwok Fai Geoffrey Tso ◽

Jingjing Yang

Keyword(s):

Listed Companies ◽

Payout Policy ◽

Dividend Payout ◽

Corporate Innovation

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Impact of Dividend Tax Change on the Payout Policy of Indian Companies

Global Business Review ◽

10.1177/0972150919846814 ◽

2019 ◽

Vol 20 (5) ◽

pp. 1282-1291

Author(s):

Sanjay Dhamija ◽

Ravinder Kumar Arora

Keyword(s):

Negative Impact ◽

Payout Policy ◽

Tax Law ◽

Dividend Payout ◽

Inside Ownership ◽

Regulatory Changes ◽

Before And After ◽

The Government ◽

The Impact ◽

Dividend Tax

The article examines the impact of regulatory changes in the tax on dividends on the payout policy of Indian companies. The tax law was recently amended to levy tax on dividends received by large shareholders. As the promoters group is the largest shareholder, this is expected to have a negative impact on the payout policy of companies. Furthermore, companies with larger promoter holdings have a higher motivation to reduce their payout. The study covers 370 companies present in the BSE 500 Index and compares the dividend payout of the companies before and after the introduction of tax levy. The study finds that the newly introduced tax indeed caused a shift in the dividend policy of companies, particularly those companies which have high levels of inside ownership. The findings have significant implications for companies, investors and the government.

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

International Journal of Emerging Markets ◽

10.1108/ijoem-05-2021-0791 ◽

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.

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