The stock-market reaction to dividend cuts and omissions by commercial banks

Bessler, Wolfgang; Nohel, Tom

doi:10.1016/s0378-4266(96)00004-0

Cited by 94 publications

(64 citation statements)

References 33 publications

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“…In addition to the basic areas affecting financial distress, dividend changes have also long been viewed as a signal of both current and expected future firm prospects. Dividends work as a signal of future growth opportunities and this is consistent with the findings of Abreu and Gulamhussen (2013), Bessler and Nohel (1996), and Filbeck and Mullineaux (1993).…”

Section: Introductionsupporting

confidence: 84%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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Abstract. This study examines the relationships between financial distress and financial ratio (liquidity, leverage, profitability, firm's performance, and dividend) among public listed companies, using the Altman Z-Score to determine the financial distress levels among public listed companies in Malaysia. Five-year data has been collected (2010 to 2014) from the annual financial statements and from Data Stream of public listed companies in Malaysia. The findings indicate significant relationships between liquidity, leverage, profitability, firm's performance, and dividend with the financial distress levels among the companies in question. This study also examines the interaction effects of financial ratios and the year after implementation of the Malaysian Code on Soheil Kazemian, Noor Shauri, Zuraidah Sanusi, Amrizah Kamaluddin, Shuhaida Shuhdan Monitoring mechanisms and financial distress of public listed companies in Malaysia 93Corporate Governance (MCCG) in 2012 on financial distress levels. The results suggest that only liquidity and firm's performance have stronger effects on financial distress levels in two years after MCCG implementation. This indicates that after the implementation of the Code, liquidity and firms' performance ratios had strong and significant effect on financial distress levels. Overall, this study could help investors, creditors as well as external regulators in monitoring companies from being classified as financially distressed companies.

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Section: Introductionsupporting

confidence: 84%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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“…Dividends are generally stable and increases or decreases are typically interpreted as signals of long-run changes in firm profitability. Reductions in dividends are generally associated with a negative stock price reaction, since they can be seen a signal of lower future profits (Ghosh and Woolridge 1998, Denis et al 1994, Bessler and Nohel 1996, 2000. During the financial crisis, concern about negative signals from a dividend cut may have been heightened, given the uncertainty and lack of [2] transparency about growing losses at individual financial firms.…”

Section: These Measures Include Basel Iii's Capital Conservation Buffmentioning

confidence: 99%

Bank Holding Company Dividends and Repurchases during the Financial Crisis

Hirtle

2014

SSRN Journal

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Many large U.S. bank holding companies (BHCs) continued to pay dividends during the 2007-09 financial crisis, even as financial market conditions deteriorated, large losses accumulated, and emergency capital and liquidity were being provided by the official sector. In contrast, share repurchases by these BHCs dropped sharply in the early part of the crisis. Documenting this divergent behavior is one of the key contributions of this paper. The paper also examines the role that repurchases played in large BHCs' decisions to reduce or eliminate dividends. The key findings are that smaller BHCs in the sample with higher levels of repurchases before the financial crisis reduced dividends later and by less than BHCs with lower pre-crisis repurchases, suggesting that repurchases may have served as a cushion against cutting dividends. In contrast, there is only a weak relationship between pre-crisis repurchases and the timing and extent of dividend reductions for the larger BHCs, even though these BHCs were more likely overall to reduce or eliminate dividends during the crisis.

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“…Likewise, if regulators 'force' a bank to change its dividend policy, this will inevitably communicate private information to shareholders and depositors about the bank's solvency status. Bessler and Nohel (1996) argue that this multidimensional aspect of the asymmetric information problem faced by banks, customers, and shareholders is an important factor in arguing that dividend policy of the banks are different from non-financial firms. Miller and Modigliani (1961) suggested that dividends might convey information about firms' future earnings if management pursued a policy of dividend stabilisation, and used changes in the dividends payout to signal a change in their views about the firms' future profitability.…”

Section: Agency Theorymentioning

confidence: 99%

Product market competition, regulation and dividend payout policy of Malaysian banks

Ameer

2008

Journal of Financial Regulation and Compliance

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Purpose -This paper investigates the impact of the product market competition, regulations on the dividend policies of the listed banks, over the period of 1995-2005 in Malaysia. Methodology -Ordered Probit modelling technique and target adjustment model. Findings-We find significant differences in the payout of the banks categorized as selling a non-interest based banking products and mix of both interest and non-interest based banking products. We find that the decision to increase dividends is significantly related to earnings, and the decision to cut dividend is significantly related to the changes in the non-performing loans, corporate and real estate sectors loans ratio and earnings loses. Research implications -Research findings have implication for the regulators of the banks. Originality/value -The research provides a clear link between banks' portfolio choice and earnings that have implications for the dividends in the emerging markets.

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The stock-market reaction to dividend cuts and omissions by commercial banks

Cited by 94 publications

References 33 publications

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Bank Holding Company Dividends and Repurchases during the Financial Crisis

Product market competition, regulation and dividend payout policy of Malaysian banks

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