Trend of dividends disappearing and reappearing in Pakistani listed firms

abdul hameed, Dr.Muhammad Ayub Khan Maher, Dr.Akhtiar Ali, Muhammad Mohsin Khan

Abstract


The objective of this study was to explore the main factors of dividend policy determinants. For this purpose, a sample of 150 listed firms in PSX taken into account for the period of 2008-2018.A secondary data taken from SBP publication, Stock exchange collected for this study and variables used size, debt ratio, profitability, size, investment, Firm’s Maturity, Market Capitalization, Return on Equity (ROE), Growth in Sales and leverage was utilized using Panel regression techniques. Data of dividend shows most of the period dividend amount and dividend firms increased during the period of research 2008-18. The trend also show that dividend pattern increase as base year data to end period study during both democratic government. Study findings also show that three different aspects of the dividend payment propensity during 2008-2018. Results show that payment of dividend is declined mostly in the small and newly firms because they have less income generated from profit, younger firms, and firms as compared with highly investment pattern of firm, high debts, higher risk in their business and high tax rates on dividend.Study also finds a significant and positive association with propensity to pay dividend of catering theory and support the catering theory.


Full Text:

PDF

References


Acharya, V. V., Gujral, I., Kulkarni, N., & Shin, H. S. (2011),“Dividends and bank capital inthe financial crisis of 2007-2009” (Working paper w16896). Cambridge, MA: National Bureau of Economic Research.

Agarwal, R. N. (2000). “Capital market development, corporate financing pattern, and economic growth in India (Working paper 01/2000).” New Delhi, India: Institute of Economic Growth.

Amihud, Y., & Li, K. (2006). “The declining information content of dividend announcements and the effects of institutional holdings.”Journal of Financial and Quantitative Analysis, 41,637–660.

Baker, H. K. (2009). “Dividends and dividend policy.” Hoboken, NJ: John Wiley & Sons.

Baker, M., &Wurgler, J. (2004a). “A catering theory of dividends.”Journal of Finance, 59,1125–1165.

Baker, M., &Wurgler, J. (2004b). “Appearing and disappearing dividends: The link to cateringincentives.”Journal of Financial Economics, 73, 271–288.

Banerjee, S., Gatchev, V. A., &Spindt, P. A. (2007). “Stock market liquidity and firm dividend policy.”Journal of Financial and Quantitative Analysis, 42, 369–397.

Bank, S., Cheffins, B., & Goergen, M. (2009). “Dividends and politics.”European Journal of Political Economy, 25, 208–224.

Boehme, R. D., &Sorescu, S. M. (2002). “The long-run performance following dividend initiations and resumptions: Underreaction or product of chance?”Journal of Finance, 57,871–900.

Bulan, L., Subramanian, N., &Tanlu, L. (2007). “On the timing of dividend initiations.”Financial Management, 36, 31–65.

DeAngelo, H., DeAngelo, L., & Skinner, D. J. (2004). “Are dividends disappearing? Dividend concentration and the consolidation of earnings.”Journal of Financial Economics, 72, 425–456.

DeAngelo, H., DeAngelo, L., &Stulz, R. M. (2006). “Dividend policy and the earned/contributed capital mix: A test of the life-cycle theory.”Journal of Financial Economics, 81, 227–254.

Denis, D. J., &Osobov, I. (2008). “Why do firms pay dividends? International evidence on the determinants of dividend policy.”Journal of Financial Economics, 89, 62–82.

Eije, H., & Megginson, W. L. (2008). “Dividends and share repurchases in the European Union.”Journal of Financial Economics, 89, 347–374.

Fama, E. F., & French, K. R. (2001). “Disappearing dividends: Changing firm characteristics orlower propensity to pay?”Journal of Financial Economics, 60(1), 3–43.

Fama, E. F., & French, K. R. (2004). “New lists: Fundamentals and survival rates.”Journal of Financial Economics, 73, 229–269.

Fatemi, A., &Bildik, R. (2012). “Yes, dividends are disappearing: Worldwide evidence.”Journal of Banking & Finance, 36, 662–677.

Ferris, S. P., Sen, N., &Yui, H. P. (2006). “Are fewer firms paying more dividends? Theinternational evidence.”Journal of Multinational Financial Management, 16, 333–362.

Frankfurter, G., Wood, B. G., &Wansley, J. (2003). “Dividend policy: Theory and practice.” SanDiego, CA: Academic Press.

Grullon, G., Michaely, R., &Swaminathan, B. (2002). “Are dividend changes a sign of firmmaturity?”Journal of Business, 75(3), 387–424.

Hoberg, G., &Prabhala, N. R. (2009). “Disappearing dividends, catering, and risk.”Review ofFinancial Studies, 22, 79–116.

Jensen, M. C. (1986). “Agency cost of free cash flow, corporate finance, and takeovers.”American Economic Review, 76, 323–329.

Julio, B., &Ikenberry, D. L. (2004). “Reappearing dividends.”Journal of Applied CorporateFinance, 16, 89–100.

Kuo, J. M., Philip, D., & Zhang, Q. (2013). “What drives the disappearing dividends phenomenon?”Journal of Banking & Finance, 37, 3499–3514.

Lintner, J. (1956). “Distribution of incomes of corporations among dividends, retained earnings,and taxes.”American Economic Review, 46, 97–113.

Litzenberger, R. H., &Ramaswamy, K. (1979). “The effect of personal taxes and dividends oncapital asset prices: Theory and empirical evidence.”Journal of Financial Economics, 7, 163–195. Miller, M. H., & Modigliani, F. (1961). “Dividend policy, growth, and the valuation of shares.”Journal of Business, 34, issue-4411–433.

Nishant B. L (2017).“Disappearing and Reappearing Dividends in Emerging Markets: Evidence from Indian Companies, “Journal of Asia-Pacific Business,

Reddy, Y. S., &Rath, S. (2005). “Disappearing dividends in emerging markets? Evidence fromIndia.”Emerging Markets Finance and Trade, 41, 58–82.

Skinner, D. J. (2008). “The evolving relation between earnings, dividends, and stockrepurchases.”Journal of Financial Economics, 87, 582–609.


Refbacks

  • There are currently no refbacks.