PurposeFinance theory proposes that consumers require information about the risk‐return trade‐off credibility information to relieve principal‐agent conflict concerns, and transaction cost information – for investment decisions. This paper aims to investigate whether or not such information is present in advertisements for one investment vehicle – mutual funds.Design/methodology/approachAll advertisements in Barron's and Money over two years were content‐analysed to determine the degree to which mutual fund advertising practice adheres to theories regarding information necessary for optimal investment decisions. Use of techniques known to influence advertisement noting (i.e. advertisement size and colour) and copy readership (i.e. visual size, text length, unique selling proposition/brand‐differentiating message, celebrity endorsements, direct or indirect comparisons with competitors, and emotional appeals) was also investigated. Finally, because mutual funds are a financial service, the presence of convenience information (e.g. investment minima, access to agents or account information, and liquidity) was studied.FindingsMutual fund advertisements are not providing the information necessary for optimal investment decisions. Mutual funds use techniques known to increase the likelihood that their advertisements are noticed, but they also use techniques known to decrease the readership of their advertisements. Also, they rarely included convenience information.Research limitations/implicationsMutual fund advertisements attempt the activation of the advertised brand‐quality and the long copy‐quality heuristic. However, future research must determine whether or not consumers are applying these two heuristics on seeing mutual fund advertisements.Originality/valueMutual fund advertising is not serving consumers. Regulators should require all mutual fund advertisements to include an easy‐to‐read table summarizing necessary investment information to assist consumer decision making.

Purpose -This paper aims to briefly review principal theories of dividend policy and to summarize empirical evidences on these theories. Design/methodology/approach -Major theoretical and empirical papers on dividend policy are identified and reviewed. Findings -It is found that the famous dividend puzzle is still unsolved. Empirical evidence is equivocal and the search for new explanation for dividends continues. Also a number of stylized empirical facts about dividends discovered by researchers are noted. Research limitations/implications -As with any review paper, the major limitation is that necessarily some papers will be left out. Also as newer research is published the review paper will become more dated. Originality/value -This paper will give the reader a comprehensive understanding of the dividend puzzle and the major paradigms of dividend policy. The paper will also give the reader the major stylized facts about dividend policy.

Bhattacharyya (2007) develops a model in which compensation contracts motivate high-quality managers to retain and invest firm earnings, while low-quality managers are motivated to distribute income to shareholders. In equilibrium, the model shows that there is a positive (negative) relationship between the earnings retention ratio (dividend payout ratio) and managerial compensation. Results of tests of US data show that executive compensation is positively (negatively) associated with earnings retention (dividend payout). Our results indicate that corporate dividend policy is perhaps best understood by considering the payout ratio (dividends divided by earnings), rather than the level of cash dividends alone. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 AFAANZ.

No abstract

No abstract