FACTORS INFLUENCING DIVIDEND POLICY IN MANUFACTURING COMPANIES

Purpose: This research aims to analyze and provide empirical evidence on cash position, collateralizable assets and firm's life cycle on dividend policy with firm's size and debt to equity ratio as the control variables. Methodology: The population includes manufacturing companies listed on Indonesia Stock Exchange and The Philippines Stock Exchange during the period of 2015-2017. The total samples of 144 were gathered from Indonesia and 81 samples were gathered from Philippine. To analyze the data, a quantitative data analysis method was used and to calculate the data, statistical method with Eviews application was used which consists of descriptive statistic test, classical assumption test, panel data regression, and the hypothesis testing. Findings: the results revealed that cash position has a significant effect on dividend policy on both Indonesian samples and Philippine samples. Whereas, collateralizable assets, firm's life cycle, firm's size, and debt to equity ratio do not have significant effects on dividend policy on both Indonesian and Philippine. It is recommended that future research add the number of company samples from other industries, not only manufacturing. It is also suggested to use company samples from other countries outside the scope of this research, and to increase the number of observed data by expanding the observed years. Additionally, it is also suggested to add other variables such as growth rate, market to book value, investment opportunity set that may potentially affect dividend policy. Value: comparison of determinants of dividend policy in Indonesia and Philippine.

Busy Boards, Firm Performance and Operating Risk

Using a sample of listed firms in Malaysia, Philippines, Singapore and Thailand, this article examines the association between busy board of directors and firm performance. We offer three results. First, we find that firm performance (measured by operating profitability and market-to-book equity) is negatively associated with busy boards. Second, we find that firms with busy boards have higher operating risk (measured by volatility of return on assets, volatility of stock returns and volatility of operating cash flow). Third, we find that the association between firm performance and busy boards is conditional on the firm’s life cycle stage. For firms in the growth stage, busy boards are beneficial to firm performance suggesting that the experience knowledge and reputation accumulated with multiple directorships help busy directors to more effectively advise these firms. In contrast, for firms in the maturity stage of their life cycle, busy boards are detrimental to firm performance suggesting the monitoring role of board is weakened by multiple directorships.

Firm Life Cycle and Investment Inefficiency

This paper investigates whether the firm's life cycle stages carry out free cash flow efficiently or not before their investment performance. We utilize cash flow patterns to classify firms into five several life cycles stages. Our data consists of non-financial firms listed in Indonesia Stock Exchange from 2008-2018. We find evidence that Indonesian firms in the introduction, growth, and shakeout stage are underinvesting. This paper also shows that firms in decline stage are overinvested. The characteristic of the mature firm includes that firms with high cash flow will tend to overinvest. However, contrasting with mature firms' common characteristics, our results show that Indonesian firms in maturity stage tend to underinvest. The results also imply that the government should acknowledge the existence of Indonesian firms' investment inefficiency problem. Overall, this paper contributes to the literature by providing empirical evidence on Indonesia's investment inefficiency phenomena. It is suggested that further research may select a different method in calculating growth opportunities and may also study private firms since it tends to have higher financial constraints.

Corporate life cycle and cash holding decisions: A South African study

The resource-based view theory suggests that as firms’ resource bases differ along the corporate life cycle, even corporate policies such as cash holdings vary along the life cycle. This study seeks to understand the effect of firm’s life cycle on corporate cash holding behavior. Previous literature has sought to investigate the firm and institutional determinants of corporate cash holdings. Using the resource-based view theory, this study investigates whether corporate life cycle can be another determinant of corporate cash holdings. A panel data analysis of a sample of 112 Johannesburg Stock Exchange (JSE) listed firms from 2011 to 2018 is utilized to determine if firm’s life cycle does influence cash holding behavior. Dickinson’s cash flow analysis is used to proxy life cycle stages and control other known determinants of corporate cash holdings such as firm size, leverage, profitability, dividend payments, and growth opportunities. Contrary to other studies, this study finds no significant relationship between life cycle stages and corporate cash holdings, suggesting that corporate cash holdings for South African firms are driven by other factors other than life cycle resource allocations. However, it is found that prior year cash balances, firm size, and profitability have significant positive relationships with cash holdings. It is also found that liquid asset substitutes, leverage, and investment opportunities exert a significant and negative influence on corporate cash holdings.

The dividend signaling hypothesis and the corporate life cycle

PurposeThis paper aims to examine the relationship between the dividend signaling hypothesis and a firm's life cycle.Design/methodology/approachThe authors use Dickinson's (2011) methodology to develop a proxy for the firm's stages in its life cycle and to examine the relationship between dividends and future earnings following a nonlinear setting.FindingsUsing a sample of US firms during the 2000–2014 period, the authors find that the signaling hypothesis can be dependent on firm-specific characteristics, such as life cycle stages. The authors report that the relationship between dividend changes and subsequent earnings changes is different for different life stages. They also find that changes in the amount of the dividend provide some information about future earnings, especially during the early (introductory and growth) stages. These results are consistent with the use of earnings or return on assets as the dependent variables in models of earnings expectations.Originality/valueThe authors believe that this is the first time that the dividend signaling hypothesis has been linked to the life cycle of the firm.

Capital Structure Decision during Firm’s Life Cycle: with Reference of Top Companies Listed in Bse 500 Operating in India in Terms of the Market Capitalization

Researchers have always made laudable contribution in examining the factors that influence an individuals and business firms to adopt and maintain the capital structure decision during a firm’s life cycle. The research methodology is carried out to examine the financing choices of top 100 firms in terms of the market capitalization through a close outlook with the business life cycle. The determinant of capital structure decision is based on profitability, liquidity, nature of industry, timing and timing of issue. Debt is taken as a fundamental source in an early stage where as in maturity stage, firm re-balance their capital structure gradually substituting debt for internal capital. This study aims to generate an idea of a dynamic evolution of the firm across the different stages, investment/disinvestment needs, profitability, cash flow generation and risk changes. Moreover, the study is carried out with a comprehensive analysis of the firm’s capital structure and the main elements in the classical theories, i.e. Trade off Theory and Pecking Order Theory.

Network characteristics of volleyball teams in Brazil: amateurism and professionalism

Objective of the study: This study aims to investigate the characteristics of the networks of volleyball teams in Brazilian context, in amateur and professional level.Methodology/Approach: This research adopted an interpretive paradigm, in which six Brazilian volleyball teams were studied. The techniques of data collection were qualitative and encompassed interviews, analysis of information available in the press and on websites and observation.Originality/Relevance: Prior literature has not investigated in-depth with the lens of the networks theory, the sports organizations at an amateur and professional level, considering the firms’ life cycle. To address this gap, considering that, similar to the life cycle of firms, amateurism and professionalism are specific strategic contexts.Main results: Our findings indicated that actor’s of team’s networks could be divided into two groups, one linked to sports and other to administrative activities. Additionally, teams’ networks have in common the fact that paid team members perform activities related to the sport itself.Theoretical/Methodological contributions: The fact that Superliga B has more collaborations obtained by personal contacts, while Superliga A teams build a more calculated network, meet the propositions made in this study and are aligned to the general idea of the work of Hite and Hesterly (2001) about changes in firm’s network and firm’s life cycle. Social contribution/for management: The main implications for management indicated that, whether companies or volleyball teams, should align their networks with the current life cycle stage. If a volleyball team plans to become professional, it should be aware of the need to adapt the network to a new division.