This study investigates the manner in which the Irish stock market responds to company announcements about dividend payments. In particular, the paper examines whether the predictions of the 'signalling' hypothesis hold or if more recent findings (which suggest that there is little value-relevant information contained in dividend changes) better characterize the Irish market. Data were obtained for a sample of 50 companies whose shares were traded on the Dublin Stock Exchange from 1987 to 2001. Abnormal returns were then calculated for the whole sample and for various dividend-earnings change combinations. The results suggest that dividend announcements are important for Irish investors, but earnings signals appear to have a stronger impact on equity values.
PurposeThis study aims to provide a modern perspective on the role of dividends in smaller developed countries such as Ireland by examining views regarding the determinants of payout levels, the role of taxation and the relevance of conventional signalling theory.Design/methodology/approachThe study employs semi‐structured interviews with the financial directors of 20 leading Irish companies.FindingsThe results suggest support for the notion that dividend policy affects share valuations. However, views regarding this issue – and the role of taxation and signalling theory – vary markedly between quoted and unquoted firms as well as depending on firms' dividend histories.Research limitations/implicationsThe study suffers from the problem that in interview‐based research the participants are necessarily a self‐selecting group. Notwithstanding this point, the evidence suggests that the views of managers in a nation with a small, but highly developed, stock market are in line with those in countries with much larger exchanges. Further research could usefully extend the analysis and establish whether similar views exist in other countries with relatively small stock markets, but where the exchange is in an “emerging” rather than “developed” state.Originality/valueThe contribution of the paper comes from the uniqueness of the Irish setting: the Irish market is relatively small but, unlike many similarly sized markets, it is highly‐developed, with long‐term historical links to the London Stock Exchange. The results, therefore, provide evidence about the extent to which earlier findings based on the world's largest developed markets also prevail in those that are more modestly sized.
Purpose -This paper aims to identify the views of Dublin-based financial analysts and major Irish fund managers on dividends. Design/methodology/approach -The paper uses semi-structured interviews with 16 participants and analyses their responses concerning the role of dividends in the share screening process; the perceived relationship between dividend payment policy and share values; the impact of taxation and attitudes to share buybacks. Findings -The results support the notion that dividends are an important in investor decision-making processes and that dividends influence share valuations. Another key finding is that fund managers appear to be able to influence the dividend policy of Irish companies in which they have a shareholding. Finally, taxation issues appear relatively unimportant and the majority of fund managers prefer cash dividends to buybacks. Originality/value -The paper addresses the issue of dividend policy from a qualitative standpoint, rather than the conventional large-sample aggregate form of analysis. Moreover, whilst most other studies have investigated the issue from the corporate point of view, this investigation focuses on analysts' and fund managers' views.
S ection 114 of the Taxes Consolidation Act 1997 restricts income tax relief for employee expenses to those which employees are necessarily obliged to incur in the performance of their duties. Despite the rigidity of this rule, income tax relief is granted for certain fl at rate expenses. This paper explores the inconsistencies in the negotiation, granting and publicising of these concessionary allowances and investigates the extent to which employee taxpayers are remiss in claiming them. Responses obtained from 557 taxpayers demonstrate confusion amongst taxpayers as to their entitlements and it is recommended that the relief should be granted at source.
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