ETD Collection

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Subject: search.filters.subject.Dividends

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Now showing 1 - 4 of 4
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    Investigation of dividend policy, corporate governance and agency costs on the Johannesburg stock exchange
    (2018) Qopana, Nts'eliseng
    Dividend policy has been an issue of much financial, economic and literature analysis for many years, and remains one of the most debated topics in the field of corporate finance to date. This study attempts to investigate the impact of dividend payments on the agency costs of companies listed on the Johannesburg Stock Exchange. It further explores the role of ownership structure and corporate governance in mitigating agency costs in such publicly listed firms. The study uses a sample of 179 firms during the period 2005-2016, collected from Inet BFA and company websites. The regression explores the different market conditions, that is, during the 2008-2009 global financial crisis and outside of the financial crisis. Three agency cost proxies are used, namely; Asset Turnover Ratio, Free Cash Flow and Sales & Management Expense Ratio. The explanatory variables for ownership structure are the largest shareholder and institutional ownership and corporate governance mechanisms and are measured by board composition, board size, and director remuneration. Dividends are found to be significant in reducing agency costs when both Free Cash Flow and Sales & Management Expense Ratio measures are used. A positive but non-significant relationship is observed between dividends and the Asset Turnover Ratio. Institutional ownership is found to be significantly related to lower agency costs under only two agency cost measures: Asset Turnover Ratio and Free Cash Flow. In analysing the impact of corporate governance mechanisms on their efficacy in mitigating agency costs, only director remuneration is found to mitigate agency costs when regressed on the Asset Turnover Ratio. When dividends are used in conjunction with corporate governance mechanisms, dividends then tend to mitigate agency costs across all the different proxies used.
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    The relations between dividend policy and stock returns in the Dar Es Salaam Stock Exchange, Tanzania
    (2015) Sylvester, Deodatus Mkoba
    Dividend policy establishes the distribution of a company’s profit whether they could pay out to the stockholders as dividends or retain the profit for re-investments in the company. There are several theories which explain the dividend behaviour, and the empirical studies suggest evidence for one over the other, however the belief concerning corporate dividend theories are different. There are two conflicting theories; those who believe in dividend relevance theory (Lintner & Gordon) and those who believe in dividend irrelevance theory (Miller & Modigliani). The key part of the study is related to the evaluation of which theory is suited for dividend policy of companies in Dar es Salaam Stock Exchange (DSE). So far numerous researchers have make an effort to solve the dividend puzzle. The main aim of this study was to establish whether there is a relationship between dividend policy and stock return of companies listed in Dar es Salaam Stock Exchange. In particular, the study focuses on three main aspects, namely; investigating the association between stock returns and dividend yield, stock price reaction to dividend announcements and identifying the factors influencing dividend policy decisions. The empirical findings confirmed that dividend yield has a strong impact on stock returns and it is statistically significant. The finding of this study supported the dividend relevance theory. The event study found that dividend announcements have an impact on share prices and the significance of the abnormal around event date confirms that the DSE market supports dividend relevance and signaling theory. Finally, the study concluded that debt ratio and age of the firms have a strong influence on the dividend policy on firms on the DSE.
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    Stock price reaction to dividend changes: an empirical analysis of the Johannesburg Securities Exchange
    (2012-05-22) Lentsoane, Enos
    This paper provides an empirical analysis of the stock price behaviour of firms listed on the Johannesburg Securities Exchange (JSE) around corporate events relating to final cash dividend change announcements over the period 2004 to 2009. Declared for the financial year-end, final cash dividend announcements either represent an increase, a reduction or no change relative to the previous year’s announcement. In this paper we analyse the stock price behaviour of firms that announced dividend reductions before and during the Global Financial Crisis of 2007 (GFC 2007). The pre-crisis analysis focuses on dividend reduction effects on share price during normal economic times and crisis analysis focuses on effects during economic downturn. We refer to the pre and during crises effects as firm-specific and systemic effects respectively. Studies about the general effect of dividend announcements on shareholder value are well documented; however our study is motivated by the fact that there has not been an abundance of forthcoming research in South Africa pertaining to how share prices have reacted to dividend reductions before and during the GFC 2007. We employ an event study methodology in the context of this emerging market to assess the share price behaviour to dividend reductions. Integral to an event study methodology in the corporate context, is the analysis of abnormal performance around the event date. Abnormal performance is measured by employing three widely used quantitative approaches namely, the market-adjusted, market model and the buy-and-hold abnormal return approaches. Based on daily closing share price information collected from iNet Bridge database, abnormal performance is calculated from 2004 to 2009 while controlling for the contemporaneous effect of earnings announcements (earnings data collected from Bloomberg database) occurring within 10 trading days of dividend announcement. The analysis shows that the market reaction is not statistically significant on the announcement day and that more negative returns occur during the pre-crisis period. Volatility of abnormal returns is higher during the pre-crisis period. The research does not support the Irrelevance Theory but seems to support the signalling hypothesis.
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    Corporate payout in South Africa: have share repurchases replaced cash dividends?
    (2012-01-18) Ramorwa, Botsang Phomolo
    A generous amount of research on payout policies has reported that the trends of payout policies have changed overtime. The common pattern in most of these studies is that fifty years ago cash dividend was the most dominant and favourable form of payout, but this pattern was not maintained and saw some changes in the 1980s. The 1980s was a period where the use of repurchases increased significantly in both the US and the UK and this increment was paired with a declining propensity to pay dividends. It is this observation that impelled researchers to suggest that share repurchases were substitutes for cash dividends as they were being finance with reductions in cash dividends. Share repurchases are a new concept in South Africa compared to other international capital markets. The implementation of the Companies Amendment Act 37 of 1999 has made it possible for companies to carry out open market stock repurchase programmes in South Africa and since then, share repurchases have become an intricate part of payout policy for South African firms. This study tests whether indeed the declining propensity to pay dividends and the increasing propensity to repurchase patternsare observable in South Africa and whether share repurchases are indeed substitutes for cash dividends in today’s markets. This study examines the payout policies of 116 companies listed on the Johannesburg Stock Exchange (JSE henceforth) between 2002 and 2009. Overall, this study finds that the use of share repurchases has increased substantially in South Africa during the sample period. Dividends have also increased significantly and the total payout ratio exhibited an upward trend between 2002 and 2009. This implies that the increase in repurchase activity was not financed by the decrease in dividends, as dividends had also followed an upward trend. There is sufficient evidence that repurchases and dividends are certainly not substitutes in South Africa.In addition to the observation thatdividend and repurchase payout ratios moved in the same direction for most parts of the sample period, a iii positive relationship between the dividend forecasting error and repurchase activity was realized, thus, dividends and repurchases weredeclared complements.