Evidence on Irish financial directors' views about dividends

Abstract

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.

Corporate dividend policy in practice: the views of Nigerian financial managers

“…Yet, significant differences emerged in the perspectives of managers of financial and non-financial firms in this regard. For the non-financial firms, the views of the interviewees contrasts strikingly with the predictions of Lintner's (1956) theoretical model of dividends and the recent empirical findings reported in McCluskey et al (2007). Specifically, all the managers of non-financial firms interviewed in the present study indicated that they are less concerned about setting a target dividend payout ratio; rather, they set their dividends based on current year's earnings.…”

“…The semi-structured interview document was piloted on both academics and practitioners, which provided further insight into the appropriateness of the research questions as well as the feasibility of the planned research timeline. The interview guide was designed based on the constructs from previous empirical literature review, including studies by Brav et al, (2005), McCluskey et al, (2007), Baker et al, (2008), Chazi et al, (2011) and Khan et al, (2011). A semi-structured interview is preferred to both the structured and unstructured interviews in this study due to its flexible nature, openness to changes, relatively high face validity and some measure of comparability (Bryman and Bell, 2007;Cameron and Price, 2009;Sekaran and Bougie, 2009).…”

Dividend Policy of Jordanian Firms: Stability Tests and Survey Results

“…Surveys of executive views on finance issues in the UK, Australia, New Zealand, Singapour, Hong Kong, Indonesia, Thailand, and Ireland have also been carried out. These studies include Kester et al (1999), and Parry (2001), Dhanani (2005), McCluskey (2007. In addition to the above, more recent papers have also been published including those by Troung et al (2006), Butt et al (2010), Mutairi et al (2012), Baker et al (2013), andOzo et al (2015).…”

The signalling effect of dividends in Pakistan: executive and analyst perspectives

“…In his seminal work, Lintner (1956) argued that firms tend to select their dividend level only once they are certain about future earnings and so their announcement reduces uncertainty about future earnings and the market value of a firm (Baker et al, 1985;Baker and Powell, 1999). Many behavioural studies have supported the notion of dividend signalling; for example, McCluskey et al (2007)[5] found that the financial directors of quoted Irish firms were supportive of the signalling hypothesis that dividend and earnings announcement were used to predict future earnings and hence affected the share prices. Similarly, Baker et al (1985)[6] and Baker and Powell (1999)[7] reported firms' belief that dividends can be used as a signalling device to convey information about likely future changes in a firm's share price.…”