Determinants of dividend policies for ADR firms

Perretti, Gizelle Fernandez; Allen, Marcus T.; Weeks, H. Shelton

doi:10.1108/mf-04-2013-0075

Cited by 19 publications

(16 citation statements)

References 29 publications

(29 reference statements)

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“…Al-Najjar (2011) reveals a significant positive impact of investment opportunity (measured as market to book ratio) on corporate dividend policy. Patra et al (2012) and Basiddiq and Hussainey (2012) identify investment opportunity as a determinant of dividend policy, while Perretti et al (2013) posit that growth opportunities are a key determinant of dividend policy in American depository receipts firms. Arko et al (2014), Yusof and Ismail (2016) and Al-Kayed (2017) propose that growth opportunities are negatively associated with dividend policy.…”

Section: Investment and Growth Opportunitiesmentioning

confidence: 99%

Determinants of dividend policy: evidence from an emerging and developing market

et al. 2019

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Purpose The purpose of this paper is to identify the determinants of dividend policy in an emerging and developing market. Design/methodology/approach The study employs a quantitative approach using 191 Sri Lankan firms and 1,337 firm-year observations as the sample. The authors apply a Binary Logistic Regression model to uncover the determinants of the propensity to pay dividends, and a Fixed Effect Panel Regression to investigate the determinants of dividend payout. Findings The authors identify past dividend decision, earnings, investment opportunities, profitability, free cash flow (FCF), corporate governance, state ownership, firm size and industry influence as the key determinants of propensity to pay dividends. In addition past dividends, investment opportunities, profitability and dividend premium are identified as the determinants of dividend payout. Moreover, there is a feedback between dividend yield and profitability in one lag and between dividend yield and dividend premium in two lags, as short-term relationships. Hence, past dividend decision or payout, profitability and investment opportunities are a common set of determinants with implications for both propensity to pay dividends and its payout. The findings support theories of dividends such as signaling, outcome, catering, life cycle, FCF and pecking order. Practical implications The findings are important for investors, managers and future research. Investors should focus on the determinants identified by our study when making investment decisions whereas managers should practice the same when formulating appropriate dividend policies for their firms. Future research should rely on propensity to pay dividends and its payout simultaneously to promote a theoretical consensus on the dividend determinant puzzle. Originality/value This is the first study that investigates determinants of propensity to pay dividends and dividend payout along with short-term relationships in a single study.

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Section: Investment and Growth Opportunitiesmentioning

confidence: 99%

Determinants of dividend policy: evidence from an emerging and developing market

et al. 2019

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“…According to Patra et al (2012), firm size, liquidity, profitability, investment opportunities, leverage and risk are important factors affecting dividend policy among Greek firms. Perretti et al (2013) identified firm size, earned and contributed capital mix, and growth opportunities as the most important dividend policy determinants in the USA for firms with American depository receipts. Arko et al (2014) found that profitability, investment opportunity, taxation, institutional shareholding, leverage and earning volatility are the leading determinants in Sub-Saharan African countries.…”

Section: Determinants Of Dividend Policymentioning

confidence: 99%

Dividend policy determinants of Sri Lankan firms: a triangulation approach

Baker

Dewasiri

Koralalage

et al. 2019

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Purpose The purpose of this paper is to identify the dividend policy determinants of Sri Lankan firms and why they pay dividends. Design/methodology/approach The study uses several quantitative approaches to investigate dividend determinants using market (secondary) data of 190 Sri Lankan firms and 1,330 firm-year observations. Dividend determinants are also identified using survey (primary) data from 141 of the 190 firms. Triangulation is then used to facilitate validation of the data through cross-verification from two data sources. Findings Analysis of the market data reveals that firm size, industry impact, corporate governance, free cash flow, earnings, past dividends, profitability, investment opportunities, net working capital, concentrated ownership structure and investor preference represent the most important dividend determinants. Survey data confirm these findings. The evidence supports the pecking order, signaling, free cash flow, catering and outcome theories using both secondary and primary data and the bird-in-the-hand theory using survey data. Research limitations/implications The findings are useful not only for corporate decision makers in establishing an appropriate dividend policy but also for shareholders in making investment decisions. Because the current study is limited to Sri Lanka, future researchers should study the same phenomenon in other countries using the triangulation approach. Originality/value This study provides a hybrid approach to dividend policy research by using both primary and secondary data in a single study. It is the first dividend study in Sri Lanka to use a triangulation approach.

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“…Tindakan tersebut dilakukan untuk mengurangi agency cost pada perusahaan atau dapat dikatakan sebagai bentuk mekanisme pengawasan pemegang saham terhadap manajerial. Dari uraian tersebut, maka hipotesis yang hendak dikembangkan yaitu: H 2 : aliran kas bebas berpengaruh positif terhadap dividen Perretti et al (2013) menguji tentang implikasi siklus hidup dan teori sinyal pada kebijakan dividen. Penelitian ini dilakukan di US stock exchange melalui American Depository Receipts.…”

Section: Salvatore Wika Lingga Pradana and I Putu Sugiartha Sanjayaunclassified

Dampak Profitabilitas, Aliran Kas Bebas, Dan Kesempatan Investasi Terhadap Pembayaran Dividen Perusahaan Perbankan

Pradana

Sanjaya

2017

Jurnal Keuangan Dan Perbankan

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This study aimed to identify and analyze the factors that affected paid dividend proxies by Dividend Payout Ratio (DPR) on the banking companies listed in Indonesia Stock Exchange (IDX). Multiple regression was a model of analysis that was used by the researchers to examine several variables which might affect the dividend payout ratio such as profitability, free cash flow, and investment opportunity set as independent variables, as well as firm size as a control variable. The samples in this study were 29 conventional banks that were listed in Indonesia Stock Exchange (IDX). The result showed that the independent variable profitability (ROA) had a significant and positive effect on the dividend payout ratio while the free cash flow variable and the investment opportunity set did not affect the dividend payout ratio. Control variables firm size had a significant and negative effect on the dividend payout ratio. AbstrakPenelitian ini bertujuan untuk mengidentifikasi dan menganalisis faktor-faktor yang memengaruhi pembayaran dividen yang diproksikan dengan Dividend Payout Ratio (DPR) pada perusahaan perbankan yang terdaftar di Bursa Efek Indonesia (BEI). Analisis Regresi adalah model analisis yang digunakan oleh peneliti untuk meneliti beberapa variabel yang mungkin memengaruhi DPR seperti profitabilitas, arus kas bebas, dan set kesempatan investasi sebagai variabel independen, serta ukuran perusahaan sebagai variabel kontrol. Sampel dalam penelitian ini adalah 29 bank konvensional yang terdaftar di Bursa Efek Indonesia (BEI). Hasil penelitian menunjukkan bahwa variabel independen profitabilitas (ROA) memiliki pengaruh yang signifikan dan positif terhadap rasio pembayaran dividen sedangkan variabel arus kas bebas dan set kesempatan investasi tidak memengaruhi rasio pembayaran dividen. Variabel kontrol ukuran perusahaan memiliki pengaruh signifikan dan negatif terhadap rasio pembayaran dividen.

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Determinants of dividend policies for ADR firms

Cited by 19 publications

References 29 publications

Determinants of dividend policy: evidence from an emerging and developing market

Determinants of dividend policy: evidence from an emerging and developing market

Dividend policy determinants of Sri Lankan firms: a triangulation approach

Dampak Profitabilitas, Aliran Kas Bebas, Dan Kesempatan Investasi Terhadap Pembayaran Dividen Perusahaan Perbankan

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