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1 – 10 of 79P. Olivier, A. van der Merwe and I. DuRand
Scrip dividend schemes provide shareholders with the option to choose shares instead of a cash dividend. Scrip dividends became popular in South Africa after the introduction of…
Abstract
Scrip dividend schemes provide shareholders with the option to choose shares instead of a cash dividend. Scrip dividends became popular in South Africa after the introduction of Secondary Tax on Companies (STC) in 1993. Thus far, no guidance on the recognition, measurement or disclosure of scrip dividends has been issued by the South African Institute of Chartered Accountants (SAICA). This article proposes disclosure regarding scrip dividend schemes that will provide relevant information to the users of financial statements. The proposed disclosure is based on the assumption that entities recognise and measure scrip dividends in accordance with the re‐investment method, as opposed to the capitalisation issue method.
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The extent of the ‘boom’ on the Stock Market — fuelled by confidence in the improvement in the rate of inflation figures and a strengthening pound — in the five weeks to August 11…
Abstract
The extent of the ‘boom’ on the Stock Market — fuelled by confidence in the improvement in the rate of inflation figures and a strengthening pound — in the five weeks to August 11 came as a surprise to many. Despite the widespread gains in most sectors, the prospect of a sustained drive forward into new high‐ground from the FT 30‐Share Index was considered unlikely — and certainly the forward momentum was substantially checked by the announcement of the disappointing balance of payment figures for July.
The paper aims to measure the magnitude of the event-induced return anomaly around bonus issue announcement days in Turkey for recent years. Also, by describing the information…
Abstract
Purpose
The paper aims to measure the magnitude of the event-induced return anomaly around bonus issue announcement days in Turkey for recent years. Also, by describing the information content of these announcements with the current data, the study tries to find out the factors that cause return anomaly in Borsa Istanbul when firm boards release the bonus issue decision.
Design/methodology/approach
The paper conducts event study methodology for detecting market anomaly around bonus issue announcements. For the pairwise comparison purpose, t-test and one-way ANOVA methods are applied to examine if abnormal returns vary according to the information content of the announcements.
Findings
Announcement returns for bonus issues from internal resources outperform the issues that are distributed from last year's net income as bonus shares. Findings indicate different return behaviour among internal resources sub-groups. Findings also suggest that investors in Turkey welcome larger-sized issues, while cumulated returns for the initial offers significantly differ from the latter issues.
Research limitations/implications
Findings are limited to the Turkish equity market. Also, the Public Disclosure Platform of Turkey, which is the main data source of the study, does not provide bonus issue announcements before 2010. Therefore, the previous year's data cannot be included in the analysis.
Originality/value
This paper is novel in terms of considering the main resources of the bonus issue in detail to measure the announcement's impact on stock returns.
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P. Olivier and I. DuRand
Scrip dividends have become increasingly popular in South Africa since the introduction of secondary tax on companies (STC) in the 1993 budget. To date there is no accounting…
Abstract
Scrip dividends have become increasingly popular in South Africa since the introduction of secondary tax on companies (STC) in the 1993 budget. To date there is no accounting standard in South Africa that prescribes a particular accounting treatment for scrip dividends; therefore, different accounting approaches are used in South Africa to account for scrip dividends. These different approaches do not always meet the substance over form principle, as required by Generally Accepted Accounting Practice (GAAP). The result is that the information disclosed to the users of the financial statements differs from company to company. This study proposes an accounting treatment for scrip dividend schemes in South Africa. It concludes that the reinvestment approach is the most acceptable accounting treatment for scrip dividend schemes in South Africa.
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This paper aims to examine the stock return behaviour around the bonus issue announcements in eight emerging markets for 2010–2019 by addressing the signalling, cash substitution…
Abstract
Purpose
This paper aims to examine the stock return behaviour around the bonus issue announcements in eight emerging markets for 2010–2019 by addressing the signalling, cash substitution and liquidity hypotheses.
Design/methodology/approach
Besides using the standard event study technique to test the presence of an anomaly, country-based regression analyses are performed. Firm-specific factors are used to understand the motive behind the anomaly observed pre- and post-announcement periods. Also, the Amihud illiquidity measure examines the liquidity hypothesis, while standardized profitability and investment ratios compare the long-run operational performance of bonus issuers to test the validity of signalling.
Findings
The findings provide evidence that abnormal returns can be detected ten days before the announcement in some countries, which is a sign of information leakage. The presence of the effect continues only in two countries after the announcement is released. The size of the bonus issue is found strongly significant in most countries, while a weak relation between abnormal return and other factors is detected. Moreover, the signalling hypothesis does not hold in the sense of long-run profitability increase, while liquidity assertion is partially presented.
Research limitations/implications
Due to an inadequate number of announcements in other emerging markets, the number of sample countries is limited by eight.
Originality/value
The research is novel regarding analyzing a wide range of emerging countries with various variables. Also, the paper is distinguished from other studies by applying multiple set of regressions under nine different event windows.
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Thanh Thi Hoang and Huu Cuong Nguyen
This study aims to investigate whether the extent of corporate disclosure, proxied by COVID-19-related disclosure, affects the dividend policy of listed firms.
Abstract
Purpose
This study aims to investigate whether the extent of corporate disclosure, proxied by COVID-19-related disclosure, affects the dividend policy of listed firms.
Design/methodology/approach
The study uses a multinomial logistic regression model to examine the relation between corporate disclosure and the dividend policy of the 100 largest market-cap firms in Vietnam in 2021. The COVID-19 pandemic, with its unique impact on business operations, serves as the backdrop for this analysis.
Findings
The findings indicate that firms with more extensive COVID-19-related disclosure are more inclined to distribute dividends in the form of stocks or cash instead of omitting them.
Originality/value
This research contributes to the understanding of how corporate disclosure practices influence a firm’s financial decisions, particularly in the context of the COVID-19 pandemic. The findings hold implications for corporate financial decision-making during times of macroeconomic shock.
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Thomas McCluskey, Bruce Burton and David Power
This study aims to provide a modern perspective on the role of dividends in smaller developed countries such as Ireland by examining views regarding the determinants of payout…
Abstract
Purpose
This study aims to provide a modern perspective on the role of dividends in smaller developed countries such as Ireland by examining views regarding the determinants of payout levels, the role of taxation and the relevance of conventional signalling theory.
Design/methodology/approach
The study employs semi‐structured interviews with the financial directors of 20 leading Irish companies.
Findings
The results suggest support for the notion that dividend policy affects share valuations. However, views regarding this issue – and the role of taxation and signalling theory – vary markedly between quoted and unquoted firms as well as depending on firms' dividend histories.
Research limitations/implications
The study suffers from the problem that in interview‐based research the participants are necessarily a self‐selecting group. Notwithstanding this point, the evidence suggests that the views of managers in a nation with a small, but highly developed, stock market are in line with those in countries with much larger exchanges. Further research could usefully extend the analysis and establish whether similar views exist in other countries with relatively small stock markets, but where the exchange is in an “emerging” rather than “developed” state.
Originality/value
The contribution of the paper comes from the uniqueness of the Irish setting: the Irish market is relatively small but, unlike many similarly sized markets, it is highly‐developed, with long‐term historical links to the London Stock Exchange. The results, therefore, provide evidence about the extent to which earlier findings based on the world's largest developed markets also prevail in those that are more modestly sized.
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Friday Kennedy Ozo, Thankom Gopinath Arun, Philip Kostov and Godfrey Chidozie Uzonwanne
The purpose of this paper is to provide an additional insight into the dividend puzzle by investigating the field practice of dividend policy in an emerging market such as…
Abstract
Purpose
The purpose of this paper is to provide an additional insight into the dividend puzzle by investigating the field practice of dividend policy in an emerging market such as Nigeria. It also aims to contribute to the literature on industry-related dividend effect by examining whether managerial views on dividend policy vary between financial and non-financial firms.
Design/methodology/approach
The study employs semi-structured interviews with the financial managers of 21 Nigerian listed firms. The interviewees were divided into two broad groups of financial vs non-financial firms based on the industry classification of the firms.
Findings
The findings suggest that, despite differences in institutional environment, the dividend-setting process in Nigerian companies is similar in many extents to those in the USA and other developed markets. Nigerian companies exhibit dividend conservatism and typically focus on current earnings, stability of earnings and availability of cash when determining their current dividend levels. However, unlike in prior studies, the interviewees suggest that their companies do not have a target payout ratio; instead, they target the dividend per share when determining the disbursement level. Nevertheless, views regarding these issues vary significantly between financial and non-financial firms.
Originality/value
This paper adds to the extant literature that has examined the behavioural aspects of dividend policy using interviews, especially in the context of less-developed markets such as Nigeria. The study also updates and extends prior evidence on an industry-related effect on managerial perceptions of dividend policy.
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As the leaves began to fall with the advent of October, so did the hopes and aspirations of many investors who, two short weeks before, had been encouraged into supposing that…
Abstract
As the leaves began to fall with the advent of October, so did the hopes and aspirations of many investors who, two short weeks before, had been encouraged into supposing that with the FT 30‐Share Index at its 1978 peak of 535.5 the sky was the limit.
Abimbola Adedeji and Richard Baker
Evidence reported by Geczy, Minton and Schrand (1997) showed that foreign exchange risk had a significant influence on the use of currency derivatives but that interest cover and…
Abstract
Evidence reported by Geczy, Minton and Schrand (1997) showed that foreign exchange risk had a significant influence on the use of currency derivatives but that interest cover and financial leverage did not. In this study, we suggest that the reason why foreign exchange risk was significant but interest cover and financial leverage were not significant in the evidence was because currency derivatives were used to measure the dependent variable. We verify the validity of this suggestion by testing the influence of interest cover and financial leverage on the use of interest rate derivatives. Our sample comprises 140 firms in the UK, 48 of which use interest rate derivatives. Evidence observed shows that interest cover and financial leverage have a significant influence on the use of interest rate derivatives and that foreign exchange risk does not. We also compare the previous evidence referred to above with our results to determine whether there is a difference between the factors that motivate firms to use currency derivatives or interest rate derivatives. The result of the comparison indicates that dependence on overseas product and capital markets, tax, institutional shareholding and economies of scale are the factors that motivate firms to use currency derivatives. The result also indicates that high interest cover (i.e. interest/profit before interest and tax)or total debt ratio, economies of scale and directors’ shareholding are the factors that motivate firms to use interest rate derivatives.
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