Within the listed companies, there is no effective mainten- ance of the rights and interests of small and medium inves- tors, and even some companies are still trying to avoid the legal rights and interests of legal compliance (Nielsen T et al. 2016) . In particular, the large shareholders in the listed companies are often more rapid and ahead of the company’s information sources. In this convenient condi- tion, the large shareholders adopt various kinds of practices of irregularities for favoritism and occupy the “oil and water” of small and medium investors from various levels (Zhang Z et al. 2016) . Many scholars have studied the stock market data of the past 10 years, and found that in the listed companies with the same dividenddistribution, the more the ownership of the stock, the announcement of the dividend policy will be more welcomed by the investors (Qiu C et al. 2016) . When the listed companies carry out the same dividenddistribution, the more the mutual supervision and restriction among all the shareholders is standardized, the more successful the dividend policy is to get the good evaluation of the investors (Yang B et al. 2016) . Under the support of this research result, the research on the interaction mechanism of dividend
This study investigates the impact of dividenddistribution on the predictability of cash flow data. Predictability is defined as the ability of an accounting variable to predict future cash flows. DividendDistribution among shareholders is an indicator for predicting cash flow. The period of this study is from 2007-2012 and the sample is 121 companies listed on the Tehran stock exchange. In this research, the dependent variable is cash flow predictability and the independent variable is dividenddistribution as well as control variable is firm size. Multivariate regression analysis was used to test the research data. According to the research findings, cash flow forecasting has normal distribution and the changes in future cash flows are because of changes in dividenddistribution (cash distributions to shareholders). The research findings show firm size has the same effect on free cash flow and operating cash flow.
Recursive right-tailed unit root tests have recently become a popular tool to test the existence of stock price bubbles. These tests require continuous data on dividenddistribution that is not always available, in particular when it comes to sectoral indexes or individual stocks. In this paper we show that it is possible to circumvent this problem by applying the test to an equity bubble using the book-to-market ratio. We illustrate our framework by testing for a bubble in the Israeli stock market, where data on continuous dividenddistribution are uncommon.
The provision contained in section 18(1) of the Act, which is applicable where goods were acquired for use in the course and furtherance of an enterprise of a vendor, but are subsequently used to make exempt or non-taxable supplies, must be considered. It would appear that a vendor who acquires goods to use in the course and furtherance of his enterprise, and who subsequently distributes those goods to shareholders who are not connected persons to that vendor, as a dividend in specie , could incur a change in use and section 18(1) of the Act would result in the value of the supply being deemed at market value in terms of 10(7) of the Act, resulting in a liability for output tax to arise. The provisions of section 18(1) would however not apply if input tax was denied on acquisition of the asset (which is distributed as dividend in specie) in terms of section 17. In the context of a dividend in specie it would entail that if the declaring company on acquisition of the asset would have been denied a claim for input tax there would be no output tax in terms of section 18(1) on the subsequent distribution of the asset in specie. As the value of the supply is provided for specifically in section 10(7) of the Act, the provisions of section 10(23), at no consideration, would not apply. The precedence of section 10(7) over section 10(23) clarifies the initial mismatch noted by Viviers (2015). If the provisions of section 18(1) (read with 10(7)) thus applied, it could result in a supply at market value even if no consideration was charged by the supplier.
Our study is important as it helps clarify contradictory results in the literature. A similar study, (Aguenaou et al. ), conducted in Morocco, found a negative relationship between ownership concentration and dividenddistribution. However, we argue that the fact that these authors studied companies during the period covering 2004-2010, which includes the period of the sub-prime financial crisis, the results could contain important biases. Moreover, these same authors included financial companies, which we excluded. This is important, since financial companies are typically removed from similar studies due to specific regulations that could affect ownership and dividend regulations.
The results of our survey lead to the conclusion that financial decisions (debt, equity and distributions) of Tunisian firms do have a significant impact on investment decisions. In addition, it appears that financial managers of those firms do not take into account investment and dividenddistribution decisions when deciding the amount of new funds that will be raised. Finally, dividend decisions of Tunisian firms and in contrast with American ones are not influenced only by the level of earnings, but also by both investment and financing decisions. In this problematic of strategic financial decision coherence, results of our research drove to have a precise vision of network relationship between decisional financial variables. This coherence for financial managers' behavior remains the center of the interdependence of strategic financial decisions. It drives the decisional mechanism between, on the one hand earning operating cycle and on the other hand investment, financing and dividenddistribution triplex.
The share buyback regulation was enacted by the Government of India (GOI) in 1998 with an objective to revive the fast declining Indian capital markets and protect the interest of the investors and companies from hostile takeover bids 4 . Until 2004, the buyback process did not gain any momentum, but the year 2004 witnessed a series of share buyback announcements and this process has continued until the present day. There is much discussion in media and financial circles about this issue, but little effort was made to know the reasons behind such buyback decisions. The present study has analyzed the corporate actions such as the "free cash" policy, dividenddistribution, change in capital structure and lower profitability while deciding interpreting the intent behind these ‘tender offer buyback' and ‘open market buyback' offers between January 2004 to December 2017.The study uses a sample of ninety open market repurchasing companies with a similar number of non-repurchasing companies and of fifty-four tender buyback companies with fifty-four non-repurchasing companies in the same industry having similar market capitalization and listed on Bombay stock exchange (BSE). To investigate the drivers of open market buyback and tender offer buyback in India, a Tobit regression analysis has been used. The study concludes that ‘Tender offer buyback' is used more predominantly for capital structure corrections, while in the case of open market repurchase in India, dividend substitution and capital structure correction act as the key drivers. Whether ‘size of the firms' make any significant difference or not, study revealed positive impact on the motive for buybacks.
Repayments of Loan. A company having loan indebtedness are vowed to a high rate of retention earnings, unless one other arrangements are made for the redemption of debt on maturity. It will naturally lower down the rate of dividend. Sometimes, the lenders (mostly institutional lenders) put restrictions on the dividenddistribution still such time their loan is outstanding. Formal loan contracts generally provide a certain standard of liquidity and solvency to be maintained. Management is bound to hour such restrictions and to limit the rate of dividend payout. Time for Payment of Dividend. When should the
The first null hypothesis from our regression output in table 4.3 was rejected at 1% significant level (p<0.01). Based on this result, we therefore accept the alternate hypothesis which state that, dividend payout ratio has significant effect on performance of listed oil and gas firms in Nigeria. The implication of this findings is that a unit increase in dividend payout will result to an increase in firm performance by 1.09. The study supports the findings of, Kajola et al. (2015) but contrary to the findings of Shisia et al. (2014) who found a significant but negative relationship between DPR and firm performance. Prior studies also found insignificant relationship among DPR and EPS (Velnampy et al. (2014), Priya and Nimalathasan (2013) Eniola and Akinselure (2016),
are much develops as before 2 . Many studies conclude that firms are likely to pay stable dividend during the high growth period and it is interesting to find that how dynamic dividend policy is determined in growing economy like Pakistan. Secondly, due to weak corporate governance the ownership structure of Pakistani firms is often characterized by the dominance of one primary owner who manages a large number of affiliated firms with just a small amount of shares or investment which result in the agency conflict between the shareholders and the owner, where controlling shareholders confiscate value from minority shareholders and can influence the dividend policy easily. Thirdly, the tax environment in Pakistan is totally different as compare to developed markets. There is no capital gain tax 3 on stocks in Pakistan while 10% withholding tax is charged on dividend incomes and it is important to mention here that if the firms earned the profit and not announced the dividend that the 35% of the income tax is charged by the Government of Pakistan. There is a possibility of differences in the tax system may influence the dividend policy and also influence the degree of dividend smoothing in Pakistan since this adverse tax treatment of dividend income is a more serious issue than the developed countries like United States. Fourthly, in the Pakistan the payment of dividend is voluntary. In Korea for example, it is mandatory for listed companies to pay the annual dividend divided by its face value at a level equal to the interest rate of one year time deposit. In fact, in Pakistan the many major investors are still disagreed with dividends and consider stock prices appreciation as the major component of stock returns therefore, it is assumed that investor attitude towards dividends is expected to have an impact on the way in which firms set their dividend policy in Pakistan.
Organization’s long run survival or potentiality largely depends on its competitive advantages. Possibility of creating these competitive advantages largely depends on its competitiveness in stock market. Publicly listed companies always try to capture relative attractiveness in the stock market and wealth maximization goal always direct the firm to do so. But from the opposite side the investors try to judge the absolute position and the relative attractiveness of the firm. In this context the researchers, market analysts, fund managers and investors rely on various valuation techniques. However most of them rely on Price-to- Earnings ratio for valuing and evaluating individual stocks (Molodovsky 1953), where P/E ratio is a useful metric for evaluating the relative attractiveness of a company's stock price compared to the current earnings of a firm. P/E ratio, measured as dividing stock price by earnings per share, alternatively known as “Price Earnings Multiples”. Considerable research has focused on Price- to-Earnings (P/E) ratio in analyzing the stock market performance through time series analysis. Sometimes these comparisons of P/E ratio may be misleading due to lack of relevancy of this ratio in firm performance unless changes in the underlying fundamental determinants of P/E are taken into account. Previously researchers tried to identify the determinants of P/E ratio that can influence investor’s confidence towards firms for making investment decisions. Existing literature has studied the determinants of Price-to-Earnings (P/E) ratio by using various proxies of growth, dividend payout, risk and discount rate generally in developed countries (Dudney et el., 2008; Shamsuddin and Hiller, 2004 and White, 2000). However, some studies have analyzed the factors influencing price earnings ratio in developing countries (Kumar and Warne 2009; and Ramcharran 2002). Additionally to firm-specific factors, fewer studies have examined sector, size and year effects (Kumar and Warne, 2009; and Anderson and Brooks, 2006). The result was mixed and not conclusive in nature. Here this paper is also an attempt to identify some conclusive remark about the major determinants of P/E ratio.
The aim of current study is to inspect the link between dividend policy and stock price volatility by using the data of commercial banks of Pakistan and further compare different financial sectors to find out their stock prices’ behavior towards dividend policy. Panel data techniques are utilized for estimating the models in order to investigate the association between dividend policy and stock price volatility. We found a positive and statistically significant impact of dividend policy on stock price volatility in the case of commercial banks. For the Modaraba’s companies, the study found a negative and significant relationship between dividend policy and stock prices volatility. In the case of Insurance companies, the findings of the study are mixed. A positive and significant relationship was observed between dividend yield and stock prices volatility while the relationship between dividend payout ratio and stock prices volatility was found be insignificant. Further, for Mutual Funds, the study found a positive and significant relationship between dividend payout ratio and stock price volatility. Lastly, an insignificant impact is observed that dividend yield has on stock prices volatility. The paper found that the behavior of dividend policy is different among the different financial sectors in determining the stock prices. The authors have compared different financial sectors to find out the responses of dividend policy in terms of stock price volatility and hence the results of the study would be useful for different stakeholders in the financial sector.
depend on features which are unique to this period. Indeed, as Brabazon demonstrates and as we might expect from our discussion on market dynamics [Brabazon06], an MLP trained over a fixed interval tends to lose predictive power as its predictions extend further into the out-of-sample period. However, spurious outperformance resulting from a lucky or biased fit to the features of a fixed dataset can endure over multiyear out-of- sample test periods, depending on the frequency of signal generation and the distribution of returns over that period. It follows that, if we are desirous of undermining the claims of EMH, we are required to show that our system not only trains reliably well on one fixed dataset in order to predict another, but that it can maintain this reliability while incorporating new series values over time. We will want to show that, as time goes on, we can retrain our MLPs with newer data vectors and make forward predictions over more recent intervals which continue to produce above-market returns. Fundamentally, if we wish to claim our predictor can be systematically exploited for the production of above-market returns, as is required to challenge EMH, we need to demonstrate that it is robust to time.
Unless otherwise expressly provided in the applicable Award Documentation, the Plan and the Awards are not intended to provide for the deferral of compensation within the meaning of Section 409A(d)(1) of the Code, and they shall be interpreted and construed in accordance with such intent. Notwithstanding the foregoing and anything to the contrary in the Plan or any Award, if any provision of the Plan or any Award would cause the requirements of Section 409A of the Code to be violated, or otherwise cause any Participant to recognize income under Section 409A of the Code, then such provision may be modified by the Committee or the Board in any reasonable manner that the Committee or the Board, as applicable, deems appropriate; provided that the Committee or the Board, as applicable, shall preserve the intent of such provision to the extent reasonably practicable without violating the requirements of Section 409A of the Code. With respect to Awards subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code, and the provisions of the Plan and any Award Documentation shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly. If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict. Notwithstanding anything in the Plan to the contrary, if the Committee considers a Participant to be a “specified employee” under Section 409A of the Code at the time of such Participant’s “separation from service” (as defined in Section 409A of the Code), and any amount hereunder is “deferred compensation” subject to Section 409A of the Code, any distribution of such amount that otherwise would be made to such Participant with respect to an Award as a result of such “separation from service” shall not be made until the date that is six months after such “separation from service,” except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code. If an Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), a Participant’s right to such series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment, and if an Award includes “dividend equivalents” (within the meaning of
We identify 78 firms that transition from a family firm to a non-family firm during our sample period. The propensity score based matching technique allows us to match those 78 firms with firms that remain family firms but have a similar propensity to transition into a non-family firm. The matching procedure is based on observable firm characteristics using a probit model. In our case, the dependent variable of the probit model is a dummy variable for the transition from a family firm to a non-family firm. For the determination of this propensity we use family ownership (as a floating variable), family management (dummy variable), outside blockholder ownership (as a floating variable), firm size and age, profitability and industry affiliation one year before the treatment. Most of the variables are statistically significant and the Pseudo-R-square is comparatively high with 31%. In particular, we use two types of matching estimators: the nearest neighbor estimator and kernel estimator. Based on both estimators we compare the propensity to pay dividends two years before the year of transition and two years after the year of transition. Thereby, we acknowledge that it takes some time for the new management to establish changes in payout policy. Both estimators lead to similar results: The propensity to pay dividends is significantly reduced through the transition from a family firm to a non-family firm. If we simply analyze the 78 transition cases, 12 firms cut dividend payments, while 64 firms continue their prior dividend policy. Not surprising, the results for the control group point in the opposite direction: Among the 78 matched firms in the nearest-neighbor approach, 20 firms even started to pay dividends, whereas no firm made a divided cut. If we compare the treatment group with the control group (average treatment effect on the treated), the propensity to pay out dividends is about 40% lower in the treatment group based on nearest neighbor matching. The results are statistically significant at least at the 5%-confidence interval (also if we use bootstrapped standard errors). Hence, the transition from a family firm to a non-family firm leads to a significantly lower propensity for dividend payments. Results from the kernel matching estimator are significant as well and point in the same direction.
Section 3 presents our model for aggregate dividends and the stochastic discount factor. As a first step to solving for prices of the aggregate market and firms, we solve for prices of claims to the aggregate dividend m-periods in the future (zero-coupon equity). Because zero-coupon equity has a well-defined maturity, it provides a convenient window through which to view the role of duration in the model. Moreover, as the model has similarities to essentially affine term structure models (Dai and Singleton (2003), Duffee (2002)), the prices and risk premia on zero-coupon equity have interpretable, closed-form expressions. The aggregate market is the sum of all of the zero-coupon equity claims. We then introduce a cross-section of long-lived assets, defined by their shares in the aggregate dividend. These assets are themselves portfolios of zero-coupon equity, and together their cash flows and market values sum up to the cash flows and market values of the aggregate market.
Dividend policy affects stock price or not - an unsolved question of corporate finance. Some experts believe that dividend policy certainly affects stock price while others feel that stock price is totally independent of dividend policy. Consequently two schools of thought, viz. relevance theorem school (supporters of Walter and Gordon) and irrelevance theorem school (supporters of Modigliani and Miller), have emerged in the arena of corporate finance. Empirical studies have been conducted on both the theorems by the researchers by using different models. However, the results were at best mixed. In this paper we would like to analyze the relationship between dividend policy and stock price of information technology sector of corporate India in liberalized era as companies belonging to this sector are to be counted among the best dividend paying companies in the Indian Inc. The present study is based on all companies of this sector which are listed on any stock exchange of India over the decade from 2002-2003 to 2011-2012. In relation to the objective of our study, we have collected data for the companies on required variables from “CAPITALINE” database. In order to examine the relationship between dividend policy and stock price, regression method has been used by taking equity dividend percentage, lagged equity dividend percentage, retained earnings to total assets ratio and lagged retained earnings to total assets ratio as independent variables and Market price per share in the current period as dependent variable. To test the statistical significance of each parameter of the proposed model, its standard error has been calculated and „t‟ test has been applied for examining its statistical significance. The statistical criterion that has been used for selection of the model is adjusted R 2 , which is a measure of goodness of fit. The F values have been reported to indicate the level of significance of the adjusted R 2 . Finally, multicollinearity problem of the model has been checked with reference to condition index and variance inflating factor. Our study confirms that irrelevance theorem holds good in information technology sector of corporate India in liberalized era.
Portfolio calculations are just the tip of the iceberg, however. If expected excess returns really do vary by as much as their average levels, and if all market price-dividend ratio variation comes from varying expected returns and none from varying expected growth in dividends or earnings, much of the rest of finance still needs to be rewritten. For example, Mertonian state variables, long a theoretical curiosity but relegated to the back shelf by an empirical view that investment opportunities are roughly constant, should in fact be at center stage of cross-sectional asset pricing. For example, much of the beta of a stock or portfolio reflects covariation between firm and factor (e.g., market) discount rates rather than reflecting the covariation between firm and market cash flows. For example, a change in prices driven by discount rate changes does not change how close the firm is to bankruptcy, justifying strikingly inertial capital structures as documented by Welch (2004). For example, standard cost-of-capital calculations featuring the CAPM and a steady 6% market premium need to be rewritten, at least recognizing the dramatic variation of the initial premium, and more deeply recognizing likely changes in that premium over the lifespan of a project and the multiple pricing factors that predictability implies.
and trading activity are needed to distinguish between the two theories. Their results show that trading volume increases significantly before and after the ex-dividend dates, and is higher for high yield stocks. Further, they find abnormal positive returns before the ex-dividend date and abnormal negative returns after the ex-dividend date, which, again, is driven by high yield stocks. They interpret these findings as short-term traders attempting to capture high dividend- yield payments. 8 Koski and Scruggs (1998) try to distinguish whether the observed increase in trading volume is attributable to securities dealers or to corporations. Security dealers will attempt to profit on the difference between the expected capital loss and the dividend. Due to their low transactions costs, dealers will buy (sell) the stock cum-dividend and sell (buy) it ex- dividend, if the price decrease on the ex-dividend date is less (greater) than the dividend. Since corporations face lower tax rates on dividends received from other corporations than on capital gains, corporations may trade to capture the dividends paid by other corporations. Koski and Scruggs find strong evidence that securities dealers engage in dividend capture strategies and weaker evidence that corporations do. 9 We investigate short sellers‟ response to the return pattern surrounding the ex-dividend day. If demand from dividend capture traders drives run up stock prices prior to the ex-dividend date, then sophisticated investors will likely short the stocks on and after the ex-dividend date to assist in the attenuation of the documented downward price movements (Lakonishok and Vermaelen, 1986).