Stock Liquidity and Dividend Policy: Dividend Policy Changes Following an Exogenous Liquidity Shock

2017 ◽  
Author(s):  
Roni Michaely ◽  
Meijun Qian
Keyword(s):  
Dividend Policy ◽  
Policy Changes ◽  
Stock Liquidity ◽  
Liquidity Shock

scholarly journals Significant changes in dividend policy and insider trading activity on the Johannesburg Stock Exchange

1991 ◽  
Vol 22 (4) ◽  
pp. 75-82 ◽  
Author(s):  
Narendra Bhana
Keyword(s):  
Insider Trading ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Policy Changes ◽  
Trading Activity ◽  
Johannesburg Stock Exchange ◽  
Timing Ability

The objective with this article was to determine whether insider trading related to unannounced dividend policy changes provided abnormal returns for shares listed on the Johannesburg Stock Exchange (JSE). The results indicate that insiders as a group seem to exhibit 'remarkable timing ability'. Significant changes in insider trading activity were detected during the six-month period prior to the resumption (omission) announcement. Company insiders trading prior to dividend changes announcements earned consistently large positive abnormal returns (avoid large negative abnormal returns). It is recommended that company insiders be required to make public the market positions they take in their company's shares. This can be expected to reduce the abnormal returns derived from insider trading and will also contribute towards improving the efficiency of the JSE.

scholarly journals Liquidity and Dividend Policy: International Evidence

2010 ◽  
Vol 3 (3) ◽  
pp. 3 ◽  
Author(s):  
Carroll Howard Griffin
Keyword(s):  
Inverse Relationship ◽  
Dividend Policy ◽  
International Level ◽  
Stock Liquidity ◽  
International Evidence

Since the days of Miller and Modigliani, academics have been studying dividend policy. There have been many theories as to why companies declare dividends, under what circumstances investors may prefer dividends to other forms of compensation, and factors that cause dividends to rise. However, the concept of liquidity has until very recently been largely ignored. This paper examines liquidity and dividend policy on the international level to determine what relationship the liquidity of a firm’s stock has on the decision of how much dividend to disburse to investors. It finds that in several specific cases, there is an inverse relationship between stock liquidity and the dividend amount paid. This perhaps would point to dividends indeed at times compensating for lower stock liquidity. 

scholarly journals Stock Market Liquidity And Dividend Policy In Korean Corporations

2017 ◽  
Vol 33 (4) ◽  
pp. 729 ◽  
Author(s):  
Jeong Hwan Lee ◽  
Bohyun Yoon
Keyword(s):  
Financial Markets ◽  
Dividend Policy ◽  
Empirical Studies ◽  
Explanatory Power ◽  
Negative Relationship ◽  
Market Liquidity ◽  
Stock Liquidity ◽  
International Evidence ◽  
Dividend Payments

The liquidity hypothesis predicts a negative relationship between stock liquidity and dividend payout propensity, i.e., a firm will decide to pay dividends to compensate for the liquidity demand of investors. This study comprehensively examines whether the liquidity hypothesis applies to the sample of Korean firms listed in the KOSPI and KOSDAQ markets. The main results of this paper are as follows. First, the dividend policy in Korean firms does not support the liquidity hypothesis, contradictory to the existing empirical studies. Next, the explanatory power of the liquidity hypothesis is even weaker for the KOSDAQ market, inconsistent with international evidence. Finally, even when we focus on the firm-year observations with non-negligible dividend payments, the liquidity hypothesis does not explain the dividend policy of Korean firms either. Our findings significantly contribute to the literature by robustly confirming the very limited role of the liquidity hypothesis for Korean financial markets.  

scholarly journals Sarbanes-Oxley, corporate governance, and strategic dividend decisions

2019 ◽  
Vol 17 (1) ◽  
pp. 116-124
Author(s):  
Mark Bertus ◽  
John S. Jahera Jr. ◽  
Keven Yost
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Governance Structure ◽  
Equity Market ◽  
Outside Directors ◽  
Policy Changes ◽  
Significant Relation ◽  
Sarbanes Oxley ◽  
The Impact ◽  
The U.S

This paper empirically analyzes the impact of the Sarbanes-Oxley Act on the relation between measures of corporate governance and a firm’s dividend policy in the U.S. equity market. Using the IRRC database, we find that there is a statistically significant relation between governance measures and a firm’s dividend policy in the years prior to the introduction of the Sarbanes-Oxley Act. However, following Sarbanes-Oxley, the relation between a firm’s governance structure and dividend policy changes. In particular, shareholders’ rights and the proportion of outside directors are no longer significant in explaining a firm’s dividend policy.

scholarly journals Impact of a Company’s Dividend Policy on the Liquidity of Shares Listed on the Warsaw Stock Exchange

e-Finanse ◽  
2017 ◽  
Vol 13 (3) ◽  
pp. 24-32
Author(s):  
Agata Gniadkowska-Szymańska
Keyword(s):  
Dividend Policy ◽  
Stock Exchange ◽  
Information Environment ◽  
Stock Liquidity ◽  
Controlling Shareholders ◽  
Dividend Payments ◽  
Warsaw Stock Exchange ◽  
Alternative Measures ◽  
Informational Effect ◽  
A Company

AbstractThis study investigates the informational effect of stock liquidity on dividend payouts. Using a sample of Polish listed companies during 2000 - 2012, I do not find a relation between stock liquidity and dividend payouts. This result is robust to the use of alternative measures of liquidity, and holds after we control for endogeneity concerns. In accord with my hypothesis that stock liquidity provides information and increases insiders’ incentive to pay out dividends, I do not find that the relation between stock liquidity and dividend payouts is more pronounced when the information environment is opaque, and when conflict between controlling shareholders and minority investors is severe.The aim of this study is to show the dependencies occurring between dividend policy and the liquidity of shares of a company. The basic thesis of this study is that decisions on dividend payments positively affect the liquidity of the shares of a company.

scholarly journals INVESTOR CONFIDENCE, CORPORATE GOVERNANCE, STOCK LIQUIDITY AND DIVIDEND POLICY

2016 ◽  
Vol 12 (1) ◽  
Author(s):  
Muhammad Rizwan ◽  
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Practical Implication ◽  
Stock Exchanges ◽  
Growth Opportunities ◽  
Stock Liquidity ◽  
Controlling Shareholders ◽  
Investor Confidence ◽  
Liquidity Constraint ◽  
The Impact

Purpose: The objective of this study is to examine the impact of investor confidence, corporate governance and stock liquidity on dividend policy of firms listed on Pakistan stock exchanges from 2010-2015. The liquidity constraint enabled a superior association with the interests of the controlling shareholders, particularly outside investors, which make a significant enhancement in firms’ liquidity and governance. Findings: Our results indicate that dividends have a less significant impact on investor confidence after the corporate governance. Practical Implication: Our interpretation is that the improvement in corporate governance, especially the improvement in the alignment between growth opportunities and cash dividends, may take longer time to emerge. These findings provide strong evidence that shift in corporate governance and stock liquidity influence dividend policy of a firm in a substantial manner. Another implication is that stock liquidity matters in firms’ dividend decision-making; the liquidity deficiency is compensated by large cash dividends.

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