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Dividend policy in India: new survey evidence

Managerial finance, 2015-02, Vol.41 (2), p.182-204 [Peer Reviewed Journal]

Emerald Group Publishing Limited ;Emerald Group Publishing Limited 2015 ;ISSN: 0307-4358 ;EISSN: 1758-7743 ;DOI: 10.1108/MF-01-2014-0024

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  • Title:
    Dividend policy in India: new survey evidence
  • Author: Baker, H. Kent ; Kapoor, Sujata
  • Rob Weigand, Dr ; H. Kent Baker, Professor
  • Subjects: Accounting & Finance ; Agreements ; Capital gains ; Capital markets ; Capital structure ; Decision making ; Dilution ; Dividend distributions ; Dividend policy ; Earnings per share ; Financial leverage ; Financial management/structure ; Flexibility ; Investments ; Polls & surveys ; Profits ; Securities buybacks ; Stock exchanges ; Stockholders ; Studies ; Tender offers
  • Is Part Of: Managerial finance, 2015-02, Vol.41 (2), p.182-204
  • Description: Purpose – The purpose of this paper is to survey managers of dividend-paying firms listed on the National Stock Exchange (NSE) in India to learn their views about the factors influencing dividend policy, dividend issues, and explanations for paying cash dividends and repurchasing shares. The authors compare the results to other dividend surveys based on firms in Indonesia, Canada, and the USA. Design/methodology/approach – The authors use questionnaire to gather primary data from a sample of 500 firms listed on the NSE. Findings – The most important determinants of dividends involve earnings (the stability of earnings as well as the level of current and expected future earnings) and the pattern of past dividends. Comparing the overall rankings of the 21 factors by respondents from Indian firms to those of Indonesian, Canadian, and US firms reveals statistically significant correlations. Respondents also perceive that dividend policy affects firm value. Respondents also view maintaining an uninterrupted record of dividends as important. The most highly supported explanations for paying cash dividends concern signaling, the firm life cycle, and catering. Although none of the theories of repurchasing shares is dominant, respondents provide little support for the agency explanation. Research limitations/implications – Although the tests suggest that the sample does not suffer from non-response bias, the findings should be viewed as suggestive rather than definitive because of the relatively low response rate. Originality/value – The paper presents new evidence about dividend policy of Indian firms. To the knowledge, this is the most comprehensive survey of Indian firms to date that captures managerial perceptions on both cash dividends and share repurchases.
  • Publisher: Patrington: Emerald Group Publishing Limited
  • Language: English
  • Identifier: ISSN: 0307-4358
    EISSN: 1758-7743
    DOI: 10.1108/MF-01-2014-0024
  • Source: ProQuest Central
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