Theoretical Models of Dividend Policy (original) (raw)

Theories on Dividend Policy Empirical Research in Joint Stock Companies in Kosovo

Procedia Economics and Finance, 2014

Global experience makes clear the importance of dividend policy as a promoter in large corporations. Corporations are the backbone of the economy as a whole, they are a key source of jobs and certainly the largest taxpayer of an economy. In recent years it appears that most common way of distributuion in global corporations is cash dividend. In the market we can also face the companies that do not pay cash dividend, and companies that do not pay dividend at all.

Dividend Policy: A Review of Theories and Empirical Evidence

The literature on dividend policy has produced a large body of theoretical and empirical research, especially following the publication of the dividend irrelevance hypothesis of Miller and Modigliani (1961). No general consensus has yet emerged after several decades of investigation, and scholars can often disagree even about the same empirical evidence. This paper aims at providing the reader with a comprehensive understanding of dividends and dividend policy by reviewing the main theories and explanations of dividend policy including dividend irrelevance hypothesis of Miller and Modigliani, bird-in-the-hand, tax-preference, clientele effects, signalling, and agency costs hypotheses. The paper also attempts to present the main empirical studies on corporate dividend policy. However, due to the enduring nature and extensive range of the debate about dividend policy which has spawned a vast amount of literature that grows by the day, a full review of all debates is not feasible. The paper reaches at a conclusion that the famous statement of Fisher Black about dividend policy "the harder we look at the dividends picture, the more it seems like a puzzle, with pieces that just do not fit together" (Black, 1976, p. 5) is still valid.

International Journal of Economics, Commerce and Management DIVIDEND POLICY AND TAXATION: A REVIEW

For decades, the company's dividend policy has been the subject of intense researches. These researches tried to establish on one side a link between the dividend policy and other factors. From other sides, these studies also aimed to study the interaction between these factors. Such as, the existing link between the dividend policy and taxation. This article presents a literature review of recent and old researches concerning the dividend policy. It studies and analyses the contributions of the diverse currents of thought. Indeed, this paper provides a summary of the work of authors who contribute to the hypothesis of the clientele effect. Résumé Depuis des décennies, la politique de dividendes de l'entreprise a fait l'objet d'intenses recherches. Ces recherches tentent d'établir un lien entre la politique de dividendes et d'autres facteurs et la manière dont ces facteurs interagissent. Par exemple, le lien entre la politique de distribution de dividende et ...

Internal factors of dividend policy in public firms in Bosnia and Herzegovina

Croatian Review of Economic, Business and Social Statistics

This paper examines the characteristics of dividend paying firms in Bosnia and Herzegovina. The research is conducted on a sample of 35 largest public firms during the period of five years, from 2013 to 2017, using multiple linear regression and logistic regression. The aim of the research is to explore the internal determinants of dividend payouts and to find whether there are any deviations from empirical experiences in the world. The research results show that larger and more profitable firms are more likely to pay dividends, while more indebted and closely held firms are less likely to pay dividends. The negative relation found between the dividend decision and investment opportunities is not statistically significant. The research results also show that the size is positively associated with higher payout ratios, while the payout ratios decrease with greater use of financial leverage. Profitability, investment opportunities and ownership concentration do not affect the level of...

DIVIDEND POLICY DECISIONS: THEORETICAL VIEWS AND RELEVANT ISSUES

This paper provides literature on dividend policy decisions by the corporates in the perspective of shareholder's wealth. Dividend payment is a signal of performance of Firms. If dividend increases, share price will also increases, which leads to the creation of shareholder's wealth. Although, extant literature review have examined issues of dividend policy, still they produced inconclusive results on the dividend policy decisions. Thus a good model that combines dividends with share buybacks is a fairly good compromise due to its advantage of flexibility, tax treatment and intangible gains. Share repurchases leads to better tax treatment than dividend and are more flexible than regular dividends for the company.

Dividend Policy and Its Impact on Firm Value: A Review of Theories and Empirical Evidence

The Empirical and theoretical research on dividend policy has produced an extensive volume of literature.The research are categorized into two different schools of thought, the first is that dividend policy of a firm has an impact on its value and the second is that dividend policy of the firm has no impact on firm value. Even after several years of research no consensus has emerged, and scholars do not even agree upon with the same empirical evidence. This study provides with a complete understanding of dividends and dividend policy by reviewing the theories and their explanations of dividend policy including both dividend relevance and irrelevance theory of Miller and Modigliani, tax-preference,bird-in-the-hand, clientele effects, signaling and agency costs hypotheses. This study also attempts to present the important empirical studies on corporate dividend policy. However, due to the continuing nature and extensive array of the debate about dividend policy which has hatched a vast amount of literature that grows by the day, a full-fledged review of all debates is not feasible.

Dividend Theory and Empirical Evidence: A Theoretical Perspective

journal of accounting finance and auditing studies (JAFAS), 2020

Objective: The objective of this study is to theoretically review the existing theoretical and empirical literature on dividend policy to understand the status and applicability of the theory in different economies and to discover any potential knowledge gaps for further research. Study Design and Methodology: This is a descriptive analysis of existing theoretical literature and its application in different economies. The study used a sample of empirical studies to gather empirical evidence. Findings: Dividend policy has a significant role in the firm decision-making process, a uniform dividend policy for all firms may not be feasible because of the differences in firms' ownership, investor's preference and firm characteristics, firms maintain a consistent dividend policy to avoid giving wrong signals to investors. The study also confirms inconsistency in the application of existing dividend theory with empirical evidence in different markets. We find that the ownership structure of a firm has greater influence in the firm decision-making process and recommend future studies should explore the extent to which ownership structure influences dividend policy and firm value. Significance of the study: This study provides a framework for evaluating dividend policy practices between developed and developing countries, evaluate the relevance and applicability of dividend theory within the context of developing economies and identify the best dividend policy practices. The study will form part of the body of knowledge in the finance literature that will enable scholars to appreciate the critical issues involved in dividend policy decisions and provide a base for identifying knowledge gaps for further research.

Impact of Dividend Taxation Changing on Dividend Policy of Romanian Companies Listed on Stock Market

2017

The aim of this paper is to analyze factors (with an influence on value of transactions on stock exchange) which induce companies listed on Bucharest Stock Exchange to pay dividends for period 2008 – 2015. First we will estimate five regression models, taking into account some financial and macroeconomics variables. Second we will rebuild these five regression models including a dummy variable which indicates the change of dividend tax rate. Our analyses emphasized the fact that net income, liquidity index, BET return and total assets have a significant effect on dividend payment policy which keeps their significance also after introducing the dummy variable, except the BET rate which decreased its significance. Also only the change of dividend tax rate and net income have a positively significant impact over dividend payment policy of Romanian ‘companies. The findings from this study are useful to be taken in account by the board of managers of companies when they decide the divide...

Dividend policy theories and their empirical tests

The subject of corporate dividend policy has captivated economists for a long time, resulting in intensive theoretical modeling and empirical examinations. A number of conflicting theoretical models lacking strong empirical support define current attempts to explain the puzzling reality of corporate dividend behavior. The purpose of this paper is to determine if the method of analysis employed, sample period, and/or data frequency are responsible for this inconsistent support. The results presented here are consistent with the contention that no dividend model, either separately or jointly with other models, is supported invariably. D 2002 Elsevier Science Inc. All rights reserved. JEL classification: G35 Keywords: Dividend policy; Dividend theory; Empirical test of dividend policy 1057-5219/02/$ -see front matter D 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 5 7 -5 2 1 9 ( 0 2 ) 0 0 0 7 1 -6