The Impact of Financial Markets on Payout Policy: Evidence from Short Selling

Monetary policy, and the response it elicits from financial markets, raises normative questions. This chapter, building on an introductory section on the objectives and instruments of monetary policy, analyzes two such questions. First, it assesses the impact of monetary policy on inequality and argues that the unconventional policies adopted in the wake of the financial crisis exacerbate inequalities in income and wealth. Depending on the theory of justice one holds, this impact is problematic. Should monetary policy be sensitive to inequalities and, if so, how? Second, the chapter argues that the leverage that financial markets have today over the monetary policy agenda undermines democratic legitimacy.

Download Full-text

The impact of COVID-19 pandemic on transmission of monetary policy to financial markets

International Review of Financial Analysis ◽

10.1016/j.irfa.2021.101705 ◽

2021 ◽

Vol 74 ◽

pp. 101705

Author(s):

Xiaoyun Wei ◽

Liyan Han

Keyword(s):

Monetary Policy ◽

Financial Markets ◽

The Impact ◽

Transmission Of Monetary Policy

Download Full-text

Impact of Dividend Tax Change on the Payout Policy of Indian Companies

Global Business Review ◽

10.1177/0972150919846814 ◽

2019 ◽

Vol 20 (5) ◽

pp. 1282-1291

Author(s):

Sanjay Dhamija ◽

Ravinder Kumar Arora

Keyword(s):

Negative Impact ◽

Payout Policy ◽

Tax Law ◽

Dividend Payout ◽

Inside Ownership ◽

Regulatory Changes ◽

Before And After ◽

The Government ◽

The Impact ◽

Dividend Tax

The article examines the impact of regulatory changes in the tax on dividends on the payout policy of Indian companies. The tax law was recently amended to levy tax on dividends received by large shareholders. As the promoters group is the largest shareholder, this is expected to have a negative impact on the payout policy of companies. Furthermore, companies with larger promoter holdings have a higher motivation to reduce their payout. The study covers 370 companies present in the BSE 500 Index and compares the dividend payout of the companies before and after the introduction of tax levy. The study finds that the newly introduced tax indeed caused a shift in the dividend policy of companies, particularly those companies which have high levels of inside ownership. The findings have significant implications for companies, investors and the government.

Download Full-text

COVID -19 and Indian Financial Markets: A Review

Management Insight - The Journal of Incisive Analysers ◽

10.21844/mijia.16.2.1 ◽

2020 ◽

Vol 16 (02) ◽

pp. 1-8

Author(s):

Kamaldeep Kaur Sarna

Keyword(s):

Financial Markets ◽

Financial Institutions ◽

Financial Services ◽

Stock Markets ◽

Global Economy ◽

Banking Sector ◽

Global Financial Crisis ◽

Negative Impact ◽

Management Strategies ◽

The Impact

COVID-19 is aptly stated as a Black Swan event that has stifled the global economy. As coronavirus wreaked havoc, Gross Domestic Product (GDP) contracted globally, unemployment rate soared high, and economic recovery still seems a far-fetched dream. Most importantly, the pandemic has set up turbulence in the global financial markets and resulted in heightened risk elements (market risk, credit risk, bank runs etc.) across the globe. Such uncertainty and volatility has not been witnessed since the Global Financial Crisis of 2008. The spread of COVID-19 has largely eroded investors’ confidence as the stock markets neared lifetimes lows, bad loans spiked and investment values degraded. Due to this, many turned their backs on the risk-reward trade off and carted their money towards traditionally safer investments like gold. While the banking sector remains particularly vulnerable, central banks have provided extensive loan moratoriums and interest waivers. Overall, COVID-19 resulted in a short term negative impact on the financial markets in India, though it is making a way towards V-shaped recovery. In this context, the present paper attempts to identify and evaluate the impact of the pandemic on the financial markets in India. Relying on rich literature and live illustrations, the influence of COVID-19 is studied on the stock markets, banking and financial institutions, private equities, and debt funds. The paper covers several recommendations so as to bring stability in the financial markets. The suggestions include, but are not limited to, methods to regularly monitor results, establishing a robust mechanism for risk management, strategies to reduce Non-Performing Assets, continuous assessment of stress and crisis readiness of the financial institutions etc. The paper also emphasizes on enhancing the role of technology (Artificial Intelligence and Virtual/Augmented Reality) in the financial services sector to optimize the outcomes and set the path towards recovery.

Download Full-text

The impact of board composition and ownership structure on dividend payout policy: evidence from Saudi Arabia

International Journal of Emerging Markets ◽

10.1108/ijoem-05-2021-0791 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Helmi A. Boshnak

Keyword(s):

Saudi Arabia ◽

Ownership Structure ◽

Dividend Policy ◽

Payout Policy ◽

Board Composition ◽

Dividend Payout ◽

Content Type ◽

Listed Firms ◽

Propensity To Pay ◽

The Impact

PurposeThis study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.Design/methodology/approachThe paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.FindingsThe results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.Research limitations/implicationsThis study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.Originality/valueThis paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

Download Full-text