Board financial expertise and dividend-paying behavior of firms

Sarwar, Bushra; Xiao, Ming; Husnain, Muhammad; Naheed, Rehana

doi:10.1108/md-11-2017-1111

Cited by 31 publications

(16 citation statements)

References 68 publications

(63 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…On the opposite, Setiawan & Phua (2013) evidenced specifically from Indonesia that low GCG in Indonesia is negatively related to dividend policy. It supports the substitute theory and like Sarwar et al (2018) finding regarding Chinese firms. Additionally, shareholder composition is proved to be insignificant.…”

Section: Introductionsupporting

confidence: 86%

“…The complementary effect between firm level and country level CG is highlighted. Sarwar et al (2018) found contradictory results. They emphasize that Chinese firms do not use dividends as a control mechanism, while Pakistani firms confirm complement hypothesis between firms and shareholders while highlighting the importance of board composition and financial expertise.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The role of earnings and tax on dividend policy of Indonesian listed firms

Hutagaol‐Martowidjojo

Joachim

Anggraeni

2019

Jurnal Keuangan Dan Perbankan

View full text Add to dashboard Cite

Prior studies show that profitability is the main financial aspect that determines a firm's dividend policy. To add to the Indonesian' dividends literature, this study examines the role of earnings and tax as dividend policy in Indonesian listed firms. This study argues that besides profitability, Indonesian firms consider other financial performance, namely earnings (contributed capital and prior year earnings) and tax to determine their dividend policy, since earnings reflect firm's real ability to pay dividends, and tax affects the number of dividends should be paid. Using 1688 firm-year observations of Indonesian firms from 2012 to 2016, the panel data regression result shows that prior year's earnings and contributed capital, are the significant determinants of firms sample's dividend policy. However, the insignificant result is found in the corporate tax role. Meanwhile, the robustness test, earnings, and tax are significant and of the expected sign. The result implies that the higher the firms' earnings, the higher the dividend payout ratio that is used as a proxy to the firms' dividend policy. Corporate tax, on the other hand, is a significant negative determinant in some years of the observation. Higher corporate tax hinders managers to increase the dividend payout ratio. Abstrak Studi terdahulu menunjukkan bahwa profitabilitas adalah aspek keuangan utama yang menentukan kebijakan dividen perusahaan. Studi ini menambahkan literatur dividen perusahaan di Indonesia dengan mempelajari peranan earnings dan pajak pada penentuan kebijakan dividen perusahaan tercatat di Indonesia. Studi ini menyatakan bahwa selain profitabilitas, earnings (contributed capital dan earnings tahun sebelumnya) serta pajak menentukan kebijakan dividen perusahaan, karena earnings menggambarkan kemampuan real perusahaan membayar dividen dan pajak menentukan jumlah dividen yang akan dibayar. Dengan sampel observasi sebanyak 1688 tahun perusahaan pada periode 2012-2016, hasil analisa regresi panel data menunjukkan earnings adalah faktor yang signifikan dalam penentuan kebijakan dividen, tetapi hasil yang lemah ditemukan pada peranan pajak. Uji robustness menggunakan regresi OLS menunjukkan earnings dan pajak perusahaan adalah faktor yang signifikan dengan arah seperti yang diharapkan. Implikasi hasil penelitian adalah semakin tinggi earnings, semakin tinggi rasio dividend payout. Sebaliknya, pajak perusahaan berdampak negatif terhadap kebijakan dividen. Semakin tinggi pajak perusahaan akan menahan manajer membayar dividen lebih banyak, relative terhadap earnings perusahaan.

show abstract

Section: Introductionsupporting

confidence: 86%

Section: Introductionmentioning

confidence: 99%

The role of earnings and tax on dividend policy of Indonesian listed firms

Hutagaol‐Martowidjojo

Joachim

Anggraeni

2019

Jurnal Keuangan Dan Perbankan

View full text Add to dashboard Cite

show abstract

“…Researcher uses the singling theory to examine the response of market for dividend payout, dividend payment changes and their relation with firms' future earnings (Mileti c, 2011). In agency theory context, researchers have studied the determinants of dividend policy at micro and macro level including heterogeneous factors of firms (Mahdzan, Zainudin, & Shahri, 2016), corporate governance characteristics (Sarwar et al, 2018), investor protection (La Porta et al, 2002) and managerial ability (Sarwar et al, 2019). In current decade, the effect of uncertainty on dividend policy has gained wide acceptance of researchers that is followed by two correlated thrusts.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

Economic policy uncertainty and dividend sustainability: new insight from emerging equity market of China

Sarwar

Xiao

Husnain

2020

Economic Research-Ekonomska Istraživanja

Self Cite

View full text Add to dashboard Cite

We examine the influence of Economic Policy Uncertainty (E.P.U.) on dividend sustainabilitydividend termination and dividend initiation decision. Using a sample of 1,375 firms over the time span 2000-2015, our main result reveals that during high E.P.U. past dividend payers are more likely to terminate and past nonpayers are less likely to initiate dividends. However, firms that rely more on internal finance (I.F.), generate high return on invested capital (R.O.I.C.) and state-owned enterprises (S.O.E.s) are less exposed to E.P.U. Therefore, negative (positive) effect of E.P.U. on firms' dividend initiation (termination) decision is mitigated by considering firms' heterogeneous characteristics. Results also show that firms having high asset growth, maturity, profitability, cash holdings and high firm value are more likely to initiate and less likely to terminate dividend during period of high E.P.U. In addition, effects of E.P.U. on dividend sustainability is higher for firms functioning in high marketised areas relative to low marketised groups. These findings are robust under different robustness check. Finding confirms that transparent and stable implementation of economic policies can improve sustainability of firm's dividend policy.

show abstract

“…e study investigates the board financial expertise's impact on corporate cash holding, which is motivated by two reasons. First, comprehensive media reports about several firm's cash holding practices like Google, Apple, and Microsoft [12,14], along with renowned corporate scandals like HealthSouth, Enron, WorldCom, and Tyco [38,39], have shifted the attention of regulators and market makers to have financial expertise on board for effective corporate governance mechanisms.…”

Section: Introductionmentioning

confidence: 99%

“…erefore, weakening governance system in family firms in emerging economies like Pakistan requires special attention, which ultimately affects corporate policies, including cash holdings. Second, numerous studies examined the relationship of board financial expertise with specific corporate policies, including earning management [40], dividend policy [38], corruption disclosure [41], firm performance [42], and audit quality [43]. Moreover, financial expertise also improves board efficiency [44] and leads to better corporate governance practices [45].…”

Section: Introductionmentioning

confidence: 99%

Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

Um-e-Habiba

Husnain³

et al. 2021

Complexity

Self Cite

View full text Add to dashboard Cite

This study contributes to the literature by exploring the relationship between board financial expertise and cash holding policy and further showing how this relation is moderated by multiple large shareholders (MLS). This research is based on agency theory, resource dependence, trade-off, and pecking order theory to confirm how resourceful directors screen cash holding practices. This study selects the 100 listed family firms from the emerging economy of Pakistan for the period of 2006–2017. With the use of static (random and fixed effect estimator) and dynamic (GMM) estimation techniques, this study reveals that the financial expertise of the board members has a significant negative impact on the firms’ cash holding level. Further, moderating effect of MLS between board financial expertise and cash holding is significantly positive due to weak corporate governance mechanisms in family firms. Moreover, the research has implications for developing corporate governance mechanism and the management of liquid assets that corporate management might use for their benefits.

show abstract

Board financial expertise and dividend-paying behavior of firms

Cited by 31 publications

References 68 publications

The role of earnings and tax on dividend policy of Indonesian listed firms

The role of earnings and tax on dividend policy of Indonesian listed firms

Economic policy uncertainty and dividend sustainability: new insight from emerging equity market of China

Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

Contact Info

Product

Resources

About