Dividend behaviour of Indian companies under monetary policy restrictions

Pandey, Indra; Bhat, Ramesh

doi:10.1108/03074350710715782

Cited by 35 publications

(13 citation statements)

References 27 publications

(38 reference statements)

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“…While these findings imply that firms do follow stable policy, it is important to note that the speed of adjustment is equal to 0.414 (Lintner model) and 0.370 (Fama and Babiak model). These values are higher than the 0.30 reported by Lintner (1956) for US firms and the 0.33 reported by Brav et al (2005) for US firms (1984)(1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002), and lower than the 0.71 reported by Pandey and Bhat (2007) for Indian firms, and the 1.00 reported by Adaoglu (2000) for Turkish firms. The fact that high rapidity of adjustments indicates lesser smoothing and a lesser amount of stability, we can conclude that our sample of firms do follow stable dividend policy.…”

Section: Dps It = α 1 + β 1 Eps It + β 2 Dps It-1 + ε Itmentioning

confidence: 70%

Dividend Policy of Jordanian Firms: Stability Tests and Survey Results

Yaseen

Omet

Khalaf

2015

IBR

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Section: Dps It = α 1 + β 1 Eps It + β 2 Dps It-1 + ε Itmentioning

confidence: 70%

Dividend Policy of Jordanian Firms: Stability Tests and Survey Results

Yaseen

Omet

Khalaf

2015

IBR

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“…Many other major macroeconomic factors specifically monetary policy can be used along with these variables. Although, Pandey and Bhat, (2007) in India and Mohsin International Journal of Business and Management Vol. 9, No.…”

Section: Resultsmentioning

confidence: 99%

Inflation and Dividend Behavior of Pakistani Firms: An Empirical Investigation Using ARDL

Ghafoor

Khan²,

Shah³

et al. 2014

IJBM

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The purpose of this study is to examine the dividends behavior of Pakistani firms by taking a macroeconomic perspective. In doing that inflation and real growth are also considered. The paper examines the relationship between dividend yield, return on equity, real growth and inflation in the Pakistan by applying ARDL approach which is used to examine the relationship in the long run. Moreover, VECM is also applied to capture the short run impact. Results of ARDL revealed a positive relationship between inflation and dividend payments, which can be interpreted in two ways. First, inflation affects revenues and variable cost not the fixed cost; it simply increases the nominal value of corporate earnings and therefore dividend payouts, and second is that managers may try to pursue a dividend policy, which is considered to be optimal, believing that there is a desirable level of real dividend income to be paid to their investors. The results of ARDL approach show that inflation, in long term as well as in short run have positive relationship with dividends while return on equity and real growth rates showed insignificant relationship with dividend yield in both long and short run. The estimated equation remains stable over the period of study as indicated by CUSUM and CUSUMQ stability tests. This study is helpful for various investors in deciding for investment when they have fear of considerable acceleration of inflationary pressure. For example they can protect themselves against accelerating inflation rates when buying the stocks. While formulating an optimal dividend policy of the firm, managers should carefully examine the inflationary environment.

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“…Mishra and Narender (1996) also report similar findings for state-owned-enterprises in India. Pandey and Bhat (2007) have found that restricted monetary policy leads to a reduction in dividend payments. They also report that the previous two years' dividends and the current year's dividend are significant for a dividend payout in India.…”

Section: Factors Affecting Dividend Policymentioning

confidence: 99%

Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market

Pinto

Rastogi

2019

JRFM

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This study aims to determine whether a firm’s dividends are influenced by the sector to which it belongs. This paper also examines the explanatory factors for dividends across individual sectors in India. This longitudinal study uses balanced data consisting of companies listed on the National Stock Exchange (NSE) of India for 12 years—from 2006 to 2017. Pooled ordinary least squares (POLSs) and fixed effects panel models are used in our estimation. We find that size, profitability, and interest coverage ratios have a significant positive relation to dividend policy. Furthermore, business risk and debt reveal a significantly negative relation with dividends. The findings on profitability support the free cash flow hypothesis for India. However, we also found that Indian companies prefer to follow a stable dividend policy. As a result of this, even firms with higher growth opportunities and lower cash flows continue to pay dividends. We also find evidence that dividend policies vary significantly across industrial sectors in India. The results of this study can be used by financial managers and policymakers in order to make appropriate dividend decisions. They can also help investors make portfolio selection decisions based on sectoral dividend paying behavior.

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Dividend behaviour of Indian companies under monetary policy restrictions

Cited by 35 publications

References 27 publications

Dividend Policy of Jordanian Firms: Stability Tests and Survey Results

Dividend Policy of Jordanian Firms: Stability Tests and Survey Results

Inflation and Dividend Behavior of Pakistani Firms: An Empirical Investigation Using ARDL

Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market

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