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Book Dividend Policy and Corporate Governance

Download or read book Dividend Policy and Corporate Governance written by Luis Correia da Silva and published by OUP Oxford. This book was released on 2004-02-26 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dividends are not only a signal about a firm's prospects under asymmetric information, but they can also act as a corporate governance device to align the management's interests with those of the shareholders. Dividend Policy and Corporate Governance is the first comprehensive volume on the relationship between dividend policy and corporate governance, and examines in detail empirical studies and current theories. Reviewing the interactions between dividend policy and other corporate governance mechanisms, it compares results for the UK and the US with those for other countries such as France, Germany, and Japan, and provides new empirical evidence on corporate governance in continental Europe and its impact on dividends. Focusing on one of the main representatives of this system, Germany, it highlights major differences between the dividend policies of German firms and those of UK or US firms. Conventional wisdom states that German dividends are lower than UK or US dividends, yet on a published-profits basis the exact converse is true. In addition, the authors demonstrate a link between corporate control structures and dividend payouts, report evidence that the existence of a loss is an additional determinant of dividend changes, and demonstrate that the tax status of the controlling shareholder and the firm's dividend payout are not linked. The conclusions reached in this book have important implications for the current debate on corporate governance, making it invaluable for academics, finance professionals, regulators, and legal advisors.

Book An Empirical Analysis of the Dynamic Relation Among Investment Earnings and Dividends

Download or read book An Empirical Analysis of the Dynamic Relation Among Investment Earnings and Dividends written by Richard A. DeFusco and published by . This book was released on 2017 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors use a firm-level vector autoregression (VAR) framework to examine the firm-level dynamics among investment, earnings and dividends. The firm-level VAR yields Granger causality results, impulse response functions, and variance decompositions characterizing the dynamics of these three variables at the firm level. For the average firm in our sample, Miller and Modigliani (1961) dividend policy irrelevance is not supported, even in the long-run; the shocks to dividends do have long-run consequences for investment and vice versa. Dividend changes are an ineffective signal of future earnings in both the short and long term. The cost of an increased dividend is on average an immediate decrease of $3 in investment for every dollar increase in dividends and the effect is persistent up to six years after the increase in dividends.

Book Dividend Policy and Its Relationship to Investment and Financing Policies

Download or read book Dividend Policy and Its Relationship to Investment and Financing Policies written by Graham H. Partington and published by . This book was released on 1985 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Book The Effect of Dividend Policy on Market Value UK Empirical Study

Download or read book The Effect of Dividend Policy on Market Value UK Empirical Study written by Alaa A. Salih and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study tackles the relationship between dividend policy and market value of companies in the UK through three empirical models. The aim of the first model was to test the validity of the Irrelevant Theory empirically by exploring the relationship between dividend type (cash dividend, share dividend and share repurchase), earnings (EPS) and investment policy (retained earnings per share) with the market value of a company. This is achieved through the use of annual and semi-annual data for 362 companies in different UK sectors by adopting Panel Data for the period extending from 1998 to 2007 (twenty periods), where the fixed-effect (within) regression model was used to examine this sample . The second model examines if companies favour the investment policy dividend policy by investigating whether or not companies follow a residual dividends policy. This has been identified by following the methodology of Baker and Smith (2006), based on the calculation of Standardized Free Cash Flow (SFCF) for 590 UK companies in different sectors for the period from 1998 to 2007 by using annual data. The third model seeks to explore managerial preferences regarding dividend type and the most important factors affecting the company management when setting dividends policy. In this respect, the importance of the following factors has been tested: the company?s market value; the financing decision; the investment decision; signaling theory; agency theory; and shareholder structure. The questionnaire methodology used for this model where it was distributed to 1319 UK companies in different sectors. The number of responses was 208 responses is equivalent to 15.77% of the total distributed). The study arrived at a number of important results that can be summarized as follows: 1) The invalidity of the Irrelevant Theory, as the results show that there is a relationship between dividend policy and market value of a company; 2) There is a relationship between earnings, investment policy and the market value, which indicates that the dividends policy, announced earnings and investment policy work together in affecting the market value of a company; 3) UK companies, on the whole, do not adopt a residual dividends policy, implying no preference for investment policy over dividend policy, except for the two sectors banking and insurance companies where the results showed that they follow the residuals dividends policy 4) Most UK companies? managements prefer cash dividends to other venues choices because of its easy implementation; and 5) The most important factor affecting UK companies? managements when they set their dividends policy is shareholder structure while the least factor listed in importance is agency theory.

Book Dividend Policy Corporate Governance and the Managerial Entrenchment Hypothesis

Download or read book Dividend Policy Corporate Governance and the Managerial Entrenchment Hypothesis written by Jorge Farinha and published by . This book was released on 2002 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the agency explanation for the cross-sectional variation of corporate dividend policy in the UK by looking at the managerial entrenchment hypothesis drawn from the agency literature. The agency perspective of dividends asserts that cash payments to shareholders may help to reduce agency problems either by increasing the frequency of external capital raising and associated monitoring by investment bankers and investors (Easterbrook, 1984), or by eliminating free cash-flow (Jensen, 1986). Although other theories have been proposed to explain cross-sectional dividend policy (notably those based on signalling and tax clienteles), the existing empirical literature typically finds that the observed dividend behaviour is consistent with more than a single theory, and therefore usually fails to dismiss alternative explanations. However, the managerial entrenchment hypothesis taken from the agency literature offers a distinctive set of predictions that cannot be found in other competing stories for the explanation of cross-sectional dividend policy behaviour. Consistent with such hypothesis, this paper, using a large (exceeding 600 firms) sample of UK firms and two distinct periods, finds evidence of a strong U-shaped relationship between dividend payouts and insider ownership in the UK. Specifically, these findings show that after a critical entrenchment level estimated in the region of 30%, the coefficient of insider ownership changes from negative to positive. These results strongly suggest the possibility of managerial entrenchment when insider ownership reaches a threshold of around 30%. Evidence is also presented that non-beneficial holdings by insiders (i.e., shares held by insiders on behalf of third parties) can lead to entrenchment in conjunction with shares held beneficially.

Book Payout Policy

Download or read book Payout Policy written by and published by . This book was released on 2007 with total page 83 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dividend policy continues to be among the premier unsolved puzzles in finance. A number of theories have been advanced to explain dividend policy. This e-book briefly reviews the principal theories of payout policy and dividend policy and summarizes the empirical evidence on these theories. Empirical evidence is equivocal and the search for new explanation for dividends continues.

Book Valuation Approaches and Metrics

Download or read book Valuation Approaches and Metrics written by Aswath Damodaran and published by Now Publishers Inc. This book was released on 2005 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: Valuation lies at the heart of much of what we do in finance, whether it is the study of market efficiency and questions about corporate governance or the comparison of different investment decision rules in capital budgeting. In this paper, we consider the theory and evidence on valuation approaches. We begin by surveying the literature on discounted cash flow valuation models, ranging from the first mentions of the dividend discount model to value stocks to the use of excess return models in more recent years. In the second part of the paper, we examine relative valuation models and, in particular, the use of multiples and comparables in valuation and evaluate whether relative valuation models yield more or less precise estimates of value than discounted cash flow models. In the final part of the paper, we set the stage for further research in valuation by noting the estimation challenges we face as companies globalize and become exposed to risk in multiple countries.

Book Dividend Policy and Behavior in Emerging Markets

Download or read book Dividend Policy and Behavior in Emerging Markets written by Jack D. Glen and published by World Bank Publications. This book was released on 1995 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Book An Empirical Analysis of a Selling Policy to Increase Dividend Income in the Investment Management of an Income Trust

Download or read book An Empirical Analysis of a Selling Policy to Increase Dividend Income in the Investment Management of an Income Trust written by James Arthur Bennett and published by 1975 [c1976]. This book was released on 1975 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Book Corporate Payout Policy

Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.