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Article
Publication date: 14 August 2018

H. Kent Baker, Sujata Kapoor and Imad Jabbouri

This study aims to examine dividend policy from the perspective of institutional investors in India. It focuses on the level of importance these investors attach to the…

Abstract

Purpose

This study aims to examine dividend policy from the perspective of institutional investors in India. It focuses on the level of importance these investors attach to the dividend policy of their investee firms, the level of influence they exercise in shaping such firms’ dividend policies and their reactions to changes in dividends. This study also reports how institutional investors view various explanations for paying dividends.

Design/methodology/approach

A mail survey provides a profile of respondents and their firms, as well as responses to 29 closed-ended questions involving various explanations for paying dividends and 22 closed-ended questions on various dividend issues.

Findings

The evidence shows that Indian institutional investors attach substantial importance to dividend policy and prefer high dividend payments. Their reactions to dividend changes are asymmetric. Taxes are a major driver for why they seek dividends, whereas liquidity needs to play little role in shaping their preferences. The two most commonly used methods of active monitoring are selling shares and communicating concerns to investee companies.

Research limitations/implications

The number of responses limits the ability to test for statistically significant differences between the various competing hypotheses.

Practical implications

The findings support multiple explanations for paying cash dividends and provide new evidence supporting the positive relation between inflation and dividend payments.

Originality/value

This study provides the first survey evidence on the views of institutional investors on dividend policy in India.

Details

Qualitative Research in Financial Markets, vol. 10 no. 3
Type: Research Article
ISSN: 1755-4179

Keywords

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Article
Publication date: 13 July 2015

H. Kent Baker and Sujata Kapoor

The purpose of this paper is to investigate the opinions of managers of Indian firms on stock splits and bonus shares (stock dividends) and relate them to explanations for…

Abstract

Purpose

The purpose of this paper is to investigate the opinions of managers of Indian firms on stock splits and bonus shares (stock dividends) and relate them to explanations for stock distributions identified in the prior literature.

Design/methodology/approach

The authors use descriptive statistics from a mail survey to the company secretaries of 500 firms listed on the National Stock Exchange of India to elicit their responses about statements involving stock splits and bonus shares.

Findings

The survey evidence shows that among the competing motives for stock splits, the liquidity hypothesis receives the highest level of support followed by the attention-getting variant of the signaling hypothesis, signaling, and the preferred trading range hypotheses. Regarding bonus shares, respondents express strong support for the retained earnings, liquidity, and signaling hypotheses but lesser support for the cash substitution and preferred trading range hypotheses.

Research limitations/implications

The survey evidence provides new insights into the stated motivations for stock distributions, especially bonus shares, among Indian firms but the ability to generalize the results is tempered by the relatively small number of respondents. This limits the ability to test for statistically significant differences between the various competing hypotheses. Hence, the results are suggestive rather than definitive.

Practical implications

The survey evidence suggests that no single explanation dominates all others for issuing stock splits or bonus shares in India. Thus, managers have multiple reasons for engaging in stock distributions.

Originality/value

Few studies use survey methodology to examine Indian dividend policy. Given the dearth of survey evidence on stock distributions among Indian firms, this study not only updates the limited evidence on stock splits but also provides the first survey evidence about managerial views on bonus shares.

Details

Managerial Finance, vol. 41 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 3 August 2015

Jaya Mamta Prosad, Sujata Kapoor and Jhumur Sengupta

The purpose of this paper is to examine the presence the behavioral biases in Indian investors specifically, overconfidence, excessive optimism (pessimism), herd behavior…

Abstract

Purpose

The purpose of this paper is to examine the presence the behavioral biases in Indian investors specifically, overconfidence, excessive optimism (pessimism), herd behavior and the disposition effect. It further investigates the role of demographics and investor sophistication in influencing the biases. Finally, it reveals which bias is most prevalent in the Indian context.

Design/methodology/approach

For this purpose, a survey has been conducted on the investors of the Delhi/NCR area. The data have been collected with the help of a structured questionnaire that is analyzed with the help of relevant statistical tools.

Findings

The survey evidence shows that behavioral biases are dependent on investors’ demographics and their trading sophistication with highest influencing factors being age, profession and trading frequency. Each bias corresponds to a specific set of investor characteristics and overconfidence comes out to be the most important bias in the Indian context.

Research limitations/implications

The potential limitations of the present survey can be ascribed to socially desirable responses and their difference with actual market behavior. Further, due to time and resource constraint, the data set is limited to investors of only Delhi/NCR.

Practical implications

This study is most relevant for financial advisors, as it facilitates them in gaining a better understanding of their clients’ psychology. It can aid them in developing behaviorally modified portfolio, which best suits their clients’ predisposition.

Originality/value

The paper gives a unique insight on the investors’ profile corresponding to each bias under consideration. It not only updates the evidence on behavioral biases but also highlights which bias is the most influential in the Indian context.

Details

Qualitative Research in Financial Markets, vol. 7 no. 3
Type: Research Article
ISSN: 1755-4179

Keywords

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Article
Publication date: 8 June 2015

Jaya Mamta Prosad, Sujata Kapoor and Jhumur Sengupta

– The purpose of this paper is to capture the presence and impact of optimism in the Indian equity market.

Abstract

Purpose

The purpose of this paper is to capture the presence and impact of optimism in the Indian equity market.

Design/methodology/approach

The data set comprises the daily values of the Nifty 50 index, index options and Treasury-bill index for a period of five years (2006-2011). The focus of this paper is two pronged. It first investigates the presence of optimism (pessimism) using the pricing kernel technique suggested by Barone-Adesi et al. (2012). Second, it tries to analyze the relationship of this bias with stock market indicators like risk premium, market return and volatility using time series regression.

Findings

The findings indicate that the Indian equity market has been predominantly pessimistic from the period 2006 to 2011. The interaction of this bias with market indicators also unveils some interesting insights. The study shows that high past volatility can lead to pessimism in the Indian equity market and vice versa. It further explores that when the investors are rational, their risk and return relationship is positive while it tends to be negative when they are irrational. The impact of investors’ irrationalities on asset valuation has also been accounted by Brown and Cliff (2005).

Research limitations/implications

The findings of the paper have significant implications for fund managers and asset management companies. It is recommended that they should try to identify behavioral biases in their clients before designing their portfolios.

Originality/value

This study is one of the very few attempts to capture the presence and impact optimism (pessimism) in the Indian equity market.

Details

Review of Behavioral Finance, vol. 7 no. 1
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 9 February 2015

H. Kent Baker and Sujata Kapoor

The purpose of this paper is to survey managers of dividend-paying firms listed on the National Stock Exchange (NSE) in India to learn their views about the factors…

Abstract

Purpose

The purpose of this paper is to survey managers of dividend-paying firms listed on the National Stock Exchange (NSE) in India to learn their views about the factors influencing dividend policy, dividend issues, and explanations for paying cash dividends and repurchasing shares. The authors compare the results to other dividend surveys based on firms in Indonesia, Canada, and the USA.

Design/methodology/approach

The authors use questionnaire to gather primary data from a sample of 500 firms listed on the NSE.

Findings

The most important determinants of dividends involve earnings (the stability of earnings as well as the level of current and expected future earnings) and the pattern of past dividends. Comparing the overall rankings of the 21 factors by respondents from Indian firms to those of Indonesian, Canadian, and US firms reveals statistically significant correlations. Respondents also perceive that dividend policy affects firm value. Respondents also view maintaining an uninterrupted record of dividends as important. The most highly supported explanations for paying cash dividends concern signaling, the firm life cycle, and catering. Although none of the theories of repurchasing shares is dominant, respondents provide little support for the agency explanation.

Research limitations/implications

Although the tests suggest that the sample does not suffer from non-response bias, the findings should be viewed as suggestive rather than definitive because of the relatively low response rate.

Originality/value

The paper presents new evidence about dividend policy of Indian firms. To the knowledge, this is the most comprehensive survey of Indian firms to date that captures managerial perceptions on both cash dividends and share repurchases.

Details

Managerial Finance, vol. 41 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 16 April 2020

Swati Bhauso Patil and Sujata Jena

This study aims to create a systematic knowledge base on importance and utilization patterns of underrated pseudo-cereals prevalent in the northeastern hilly (NEH) region…

Abstract

Purpose

This study aims to create a systematic knowledge base on importance and utilization patterns of underrated pseudo-cereals prevalent in the northeastern hilly (NEH) region of India, namely, buckwheat, Job’s tears, chenopod and amaranth, enabling their diversified use to develop innovative food products from them. The information presented in the paper would facilitate scientists, trainers and young entrepreneurs in developing many novel food products from these underrated pseudo-cereals.

Design/methodology/approach

Major scientific information has been collected from Scopus, Web of Science and Google Scholar. Several keywords such as underrated crop, pseudo-cereals, buckwheat, chenopod, Job’s tears, amaranth, value addition and utilization were used to find the data. Relevant information was collected by using about 60 recent research and review articles.

Findings

The main findings of this comprehensive study include compiled record of utilization of underrated pseudo-cereals found in the NEH region of India and their scope to innovate smart food products.

Originality/value

The paper presents a comprehensive record of nutritional benefits and utilization status of the underrated pseudo-cereals available in the NEH region of India. This knowledge base would help both the researchers and other professional working in the processing of these crops.

Details

Nutrition & Food Science , vol. 50 no. 6
Type: Research Article
ISSN: 0034-6659

Keywords

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