Corporate Payout Policy in France: Dividends vs. Share Repurchase

2011 ◽  
Author(s):  
Asma Benltaifa
Keyword(s):  
Payout Policy ◽  
Share Repurchase

scholarly journals Korean Firms’ Share Repurchase Activities: Firm Characteristics, Financing and Investment

2020 ◽  
Vol 49 (5) ◽  
pp. 643-679
Author(s):  
Jin Park ◽  
Hyunseok Kim ◽  
Jungwon Suh
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Univariate Analysis ◽  
Payout Policy ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Listed Firms ◽  
Internal Funds ◽  
Financing And Investment ◽  
Retained Earnings

This study examines Korean listed firms’ share repurchasing activities over the period 2006~2016 using the amount of net share repurchases from annual statements of cash flow. Korean firms use dividends rather than share repurchases as their primary payout method. Each year, the proportion of share repurchasing firms is lower than 20%, whereas the proportion of dividend-paying firms is around 70% or higher. Univariate analysis and Tobit regressions reveal that the incidence and amount of share repurchases increase with firm value, size, and cash flow. Our findings do not suggest that low valuations (or poor stock performance) or low debt ratios motivate share repurchases. Korean firms use primarily internal funds to finance share repurchases, as share repurchasing firms experience substantial increases in retained earnings. Share repurchasing firms do not invest less than other firms do, suggesting that share repurchases do not result in underinvestment. Compared to dividends, share repurchases are more positively associated with firm value. Compared to share repurchase, dividends are more positively associated with cash flow and financial maturity, but more negatively associated with stock return volatility. Finally, firms with high controlling shareholders’ ownership tend to choose dividends over share repurchases in their payout policy.

scholarly journals Signaling hypotheses of share repurchase – life cycle approach. The case of Polish listed companies

Equilibrium ◽  
2017 ◽  
Vol 12 (2) ◽  
pp. 245 ◽  
Author(s):  
Elżbieta Wrońska-Bukalska ◽  
Bogna Kaźmierska-Jóźwiak
Keyword(s):  
Life Cycle ◽  
Growth Stage ◽  
Value Added ◽  
Payout Policy ◽  
Free Cash Flow ◽  
Mature Stage ◽  
Share Repurchases ◽  
Life Cycle Approach ◽  
Share Repurchase ◽  
Financial Policies

Research background: Payout policy has attracted a great deal of research, how-ever it still has not been satisfactorily explained why corporations repurchase their shares. The most popular explanation for share repurchases is their signaling power. An alternative explanation for share repurchases is related to free cash flow. We assume that both theories are not competitive, due to the fact that the motives for share repurchases may differ depending on the firm’s life cycle stage.Purpose of the article: The aim of the paper is to test the hypotheses that companies in growth stage are more prone to repurchase their shares due to the their undervaluation.Methods: Our analysis focuses on 116 repurchase on WSE and 47 repurchase on NewCon-nect in Poland during the period 2004–2016 to test the hypothesis. We assume that companies listed on WSE are in their mature stage while listed on NewConnect are in the growth stage. We use market value to book the value ratio (M/BV) and the relation of M/BV ratio for the repurchasing company to the M/BV ratio for the whole market at the date of implementing share repurchase program as a proxies for firm valuation.Findings & Value added: Our study does not confirm that repurchased companies at a growth stage are more undervalued than repurchased companies at a mature stage (at statistically significant level), however there are more repurchased companies at a growth stage with lower M/BV value than repurchase companies in mature stage.  Adding corporate life cycle theory into the study, our result can contribute to the literature by more distinctly understanding the motivation of share repurchases. The results might be helpful for companies to determine their financial policies and for investors to determine their investment decisions.

scholarly journals Corporate payout policy in founder and family firms

2014 ◽  
Vol 11 (3) ◽  
pp. 95-112
Author(s):  
James Lau ◽  
Joern H. Block
Keyword(s):  
Adverse Effects ◽  
Family Firms ◽  
Payout Policy ◽  
Share Repurchase ◽  
Agency Conflicts ◽  
Family Conflicts ◽  
Main Method ◽  
Intra Family

This paper investigates the tax and agency explanations of corporate payout policy by investigating the likelihood, the level and the method of payout in founder and family firms. Controlling founders and families are both subject to the tax disadvantage of dividends arising from their substantial shareholdings, but family firms are arguably subject to more severe agency conflicts than founder firms due to their susceptibility to wasteful expenditure and the adverse effects of intra-family conflicts. Results indicate that founder firms on average are less likely and pay a lower level of dividends than family firms. Moreover, founder firms prefer share repurchase over dividends as the main method of payout whereas family firms prefer dividends over share repurchase. Overall, our findings are consistent with the agency explanation of corporate payout policy.

scholarly journals Speed of Adjustment in Dividend Payout Decisions: A Comparative Analysis of Developed and Developing Countries

2019 ◽  
Vol 13 (2) ◽  
pp. 7-24
Author(s):  
Nicos Koussis ◽  
Vladislav Ruzinskii
Keyword(s):  
Payout Policy ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Net Income ◽  
Specific Level ◽  
Financial Modeling ◽  
Speed Of Adjustment ◽  
Working Paper ◽  
Top Managers ◽  
Dividend Smoothing

The analysis of dividends payout policy has been apopular subject of research since the middle of the 20thcentury. Despite a huge number of investigations thereis no consensus opinion as to the best practices in thefield. Over the years, different hypotheses have been putforward proposing various methodologies. Some workingpapers underline share repurchase as the best approachtowards payout policy [1]. On the other hand, there aresome investigations which emphasize the opposite pointof view: that dividends are more preferable [2]. Anotherexplanation states that there is no qualifiable difference intypes of payout policy [3]. However, the majority of recentworking papers argue that the best approach is to combine share repurchases and dividends [4].Academic investigations into payout policy began withLintner’s working paper [5]. This research includes notonly financial modeling and results based on regression analysis, but also presents information concerningthe preferences of top-management in payout policydecisions. As a result of interviews with top managers,Lintner identified the existence of a target value fordividend payouts. So, managers tried to maintain theshare of net income attributed to dividends instead ofthe value of dividends themselves. Moreover, Lintnerfound that there is a pertinent speed of adjustment1individend policy. This phenomenon is described by thefact that in case of significant net income changes, firmsdo not pay all the dividends targeted at a specific level ofnet income. Companies only adjust the level of dividendsin the direction of the changes. Lintner also providedan explanation of this fact. It was noted that companies’top management was sure that significant changes in dividends can be negatively appraised by the stock market,especially in case of a fall in the value of dividends. So,managers understate the changes in dividends to betterassure that next year’s profit can cover the new dividends. However, next year’s net income also incurs somefluctuations, so it it is necessary to make some adjustments to dividends. As a result the process of dividendadjustment becomes permanent.The investigation of Brav et al. [6] also was devoted to theanalysis of payout policy, and included interviews with alarge number of CFOs. This research confirms the mainresults of Lintner’s work, but with some limitations. Thestudy carefully analyzed the existence of any target level inpayout decisions. The authors found that only 6% of CFOsdo not target dividends at all. However, in contrast toLintner’s work the majority of CFOs (approximately 40%)answer that their key target is dividends per share. Only28% try to target a dividends payout, and 27% of managers target dividends per share growth. This investigationshows that nowadays, targeting dividends per share is amore common practice than targeting payouts. Despite the fact that these results display some differences fromLintner’s one, they do not reject the hypothesis aboutexistence of dividend smoothing.

scholarly journals O Processo Decisório sobre a Distribuição de Lucros das Empresas Listadas na BM&FBOVESPA: Survey com CFOs

2012 ◽  
Vol 10 (4) ◽  
pp. 461 ◽  
Author(s):  
Roberto Frota Decourt ◽  
Jairo Laser Procianoy
Keyword(s):  
Board Of Directors ◽  
Investment Decision ◽  
Payout Policy ◽  
Final Decision ◽  
Share Repurchase ◽  
Compensation Policy ◽  
Agency Conflict ◽  
Net Profit ◽  
The Board Of Directors ◽  
Main Factors

The purpose of this paper is to present the results of a survey with Brazilian listed companies CFOs` trying to identify how these companies determine and manage their payout policy. It was identified that the final decision about dividends is taken by the board of directors, taking into consideration a management proposal sent to them before. Main factors analyzed are net profit and cash generation during immediate previous period. The managers mainly consider interest on own capital (JSCP) and dividends as instruments for payout policy. They believe that share repurchase is advantageous to shareholders; however, it is viewed more as an investment decision by the company than a dividend policy. The interest on own capital is broadly used because it provides a fiscal benefit to the company. It seems that management compensation policy affects dividends payout. This suggests an agency conflict between managers and shareholders.

scholarly journals Determinants of payout policy and investment attractiveness of companies listed on the Warsaw Stock Exchange

Equilibrium ◽  
2017 ◽  
Vol 12 (4) ◽  
pp. 675-691 ◽  
Author(s):  
Aleksandra Pieloch-Babiarz
Keyword(s):  
Capital Investment ◽  
Stock Exchange ◽  
Value Added ◽  
Payout Policy ◽  
Cash Transfer ◽  
Final Conclusion ◽  
Share Repurchase ◽  
Public Companies ◽  
Behavioral Determinants ◽  
Warsaw Stock Exchange

Research background: Making decisions concerning the payout policy depends on many diversified neoclassical and behavioral determinants. Although these factors are well-described in the literature, there is still a research gap concerning the lack of a comprehensive impact model of payout policy determinants on the investment attractiveness of shares. Purpose of the article: The aim of this paper is to present the diverse nature of the relation-ship between different forms of cash transfer to the shareholders and in-vestments attrac-tiveness of public companies in the context of various determinants of payout policy. The possibility of achieving this objective was conditioned by the empirical verification of research hypothesis stating that the diversify of payout forms is accompanied by the different determinants of payout policy that condition an effective investment of stock investors’ capital. Methods: The empirical research was conducted among the electromechanical companies listed on the Warsaw Stock Exchange in the years 2006-2015. The data for analysis were obtained from Notoria Service database and Stock Exchange Yearbooks. The calculations were carried out using the methodology of taxonomic measure of investment attractiveness, as well as dividend premium and share repurchase premium. Findings & Value added: The final conclusion of our research is that the companies con-ducting the payout policy in different forms of cash transfer differ in terms of many charac-teristics, such as: financial standing, market value, ownership structure, company’s size and age. Moreover, their investment attractiveness differs according to regularity of payment, stock exchange situation and shareholders’ preferences. The value added of this paper is a new approach to the evaluation of capital investment with a special emphasis on the determinants of payout policy.

The Effects of Share Repurchase Announcements on Returns in the Malaysia Stock Market

2018 ◽  
Vol 1 (1) ◽  
pp. 1 ◽  
Author(s):  
Tze San Ong ◽  
Pei San Ng
Keyword(s):  
Stock Market ◽  
Abnormal Return ◽  
Small Firms ◽  
Abnormal Returns ◽  
Share Repurchase ◽  
Before And After ◽  
Positive Abnormal Return ◽  
Repurchase Announcements ◽  
Signaling Hypothesis ◽  
Firm Characteristic

This paper examines the market response surrounding the share repurchase announcements of Malaysia Listed Companies from years 2012 to 2016. One sample T-test was carried out to identify the abnormal return in the range before and after 20 days from share repurchase announcements. The result shows a significant positive abnormal return in the day of repurchase announcements and continuously until day 1 after the announcements. Multiple regression analysis was performed in order to identify the firm characteristic of share repurchase. The finding is supported with information asymmetric, which shows that stock market reacts more favorably through the repurchase announcements by small firms than large firms. This study is consistent with the signaling hypothesis that shows share repurchase announcement can be an effective tool in stabilizing the stock market in Malaysia. The finding of this study acts as a useful tool for managers and investors to improve their decisions on share repurchase announcements in Malaysia. Company’s managers can conduct share repurchase announcements that are able to make the stock market react positively in order to generate positive abnormal returns.

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