Relationship between Orthodox Finance and Dividend Policy: A Literature Review

Authors

DOI:

https://doi.org/10.52962/ipjaf.2021.5.1.122

Keywords:

Dividend policy, dividend theories, financial elements

Abstract

This paper concentrates on the relationship between orthodox (corporate) finance and dividend policy. More specifically, the paper examines the relationship between different dividend policy theories and dividend policy. This paper also investigates the association between different corporate finance elements and dividend policy. The primary purpose of this paper is to put some light on the dividend literature, which means how dividend literature developed over the year. However still, the dividend policy is a puzzle for researchers. From the previous literature survey, we can see that after so much constrictive research, researchers still did not reach any conclusion. This paper provides details about previous literature reviews in the area of dividend policy.

References

Abeyratna, G., Lonie, A., Power, D. and Sinclair, C. (1996). The influence of company financial performance on the interpretation of dividend and earnings signals: a study of accounting- and market-based data. British Accounting Review, 28, pp. 229-247.

Adedeji, A. (1998). Does the pecking order hypothesis explain the dividend payout ratios of firms in the UK?. Journal of Business, Finance and Accounting, 25 (9-10), pp. 1127?1155.

Adjaoud, F. and Ben-Amar, W. (2010), Corporate governance and dividend policy: shareholders’ protection or expropriation?. Journal of Business Finance & Accounting, 37(5-6), pp. 648-667.

Agrawal, A. and Jayaraman, N. (1994). The dividend policies of all-equity firms: A direct test of the free cash flow theory. Managerial and Decision Economics, 15(2), pp. 139?148.

Aggarwal, R. and Kyaw, N. A. (2010). Capital structure, dividend policy, and multinational: Theory versus empirical evidence. International Review of Financial Analysis, 19, pp. 140-150.

Aharony, J. and Swary, I. (1980). Quarterly dividend and earnings announcements and stockholders’ returns: An empirical analysis. Journal of Finance, 35, pp.1–12.

Aharony, J. Falk, H. and Swary, I. (1988). Information content of dividend increases: the case of regulated utilities. Journal of Business, Finance and Accounting, 15(3), pp.401-414.

Aharony, J. and Dotan, A. (1994). Regular dividend announcements and future unexpected earnings: An empirical analysis. Financial Review, 29, pp.125-151.

Aivazian, V., Booth, L. and Cleary, S. (2003). Dividend policy and the organization of capital markets. Journal of Multinational Financial Management, 13(2), pp. 101-121.

Aivazian, V., Booth, L. and Cleary, S. (2006). Dividend smoothing and debt rating. Journal of Financial and Quantitative Analysis, 41(2), pp. 439-453.

Allen, F. and Michaely, R. (1995). In R. A. Jarrow, V. Maksimovic, and W.T. Ziemba (Eds.), Dividend policy Handbooks in operations research and management science, 9, pp.793-837.

Allen, F. and Michaely, R. (2003). Payout policy. In: George Constantinides, Milton Harris, & Rene Stulz (Eds.), North-Holland Handbook of Economics, New York: North-Holland.

Al-Najjar, B. (2011). The inter-relationship between capital structure and dividend policy: empirical evidence from Jordanian data. International Review of Applied Economics, 25(2), pp.209-224.

Ang, A. and Bekaert, G. (2007). Stock return predictability: is it there?. Review of Financial Studies, 20, pp. 651–707.

Arjun, D. and Dale, M. (1983). Market responses to dividend increases and changes in payout ratios. Journal of Financial and Quantitative Analysis, 18(2), pp. 163-173.

Asquith, P. and Mullins, D. W. Jr. (1983). The impact of initiating dividend payments on shareholders’ wealth. Journal of Business, 56(1), pp.77-96.

Asquith, P. and Mullins, D. W. Jr. (1986). Signalling with dividends, stock repurchases, and equity issues. Financial Management, 15, pp.27–44.

Ball, R. (1978). Anomalies in relationships between securities’ yields and yield surrogates. Journal of Financial Economics, 6, pp. 103–26.

Baker, M. and Wurgler, J. (2002). Market timing and capital structure. Journal of Finance, 57, pp.1-32.

Baker, M. and Wurgler, J. (2004(a)). A catering theory of dividends. Journal of Finance, 59, pp.1125–1165.

Baker, M. and Wurgler, J. (2004(b)). Appearing and disappearing dividends: the link to catering incentives. Journal of Financial Economics, 73, pp.271–288.

Bartram, S., Brown, P., How, J. and Verhoeven, P. (2012), Agency conflicts and corporate payout policies: a global study. Working Paper, Lancaster University.

Baskin, J. (1989). An empirical investigation of the pecking order hypothesis. Financial Management, 18(1), pp. 26?35.

Basu, S. (1977). Investment performance of common stocks in relation to their price-earnings ratios: A test of the efficient markets hypothesis. Journal of Finance, 32(3), pp. 663–82.

Basu, S. (1983), The relationship between earnings yield, market value, and return for NYSE common stocks: further evidence. Journal of Financial Economics, 12, pp. 129–56.

Benos, B. and Weisbach, M. (2004). Private benefits and cross-listings in the United States. Emerging Markets Review, 5(2), pp. 217-240.

Benartzi, S., Michaely, R. and Thaler, R. (1997). Do changes in dividends signal the future or the past. The Journal of Finance, 52(3), pp.1007-1034.

Berzins, J., Bohren, O. and Stacescu, B. (2019). Dividends and taxes: The moderating role of agency conflicts. Journal of Corporate Finance, 58, pp. 583-604.

Bhaduri, S. (2002). Determinants of corporate borrowing: Some evidence from the Indian corporate structure. Journal of Economics and Finance, 26, pp. 200–215.

Bhattacharya, S. (1979). Imperfect information, dividend policy and the “Bird in the Hand” fallacy. Bell Journal of Economics and Management Science, 10, pp.259–70.

Bhattacharya, S. (1979). Nondissipative signalling structures and dividend policy. Quarterly Journal of Economics, 95, pp.1-24.

Bhattacharyya, N. (2007). Dividend policy: a review. Managerial Finance, 33(1), pp.4-13.

Booth, L., Aivazian, V., Demirguc-Kunt, A. and Maksimovic, V. (2001). Capital structures in developing countries. Journal of Finance, 56(1), pp. 87–130.

Brickley, J. (1983). Shareholder wealth, information signalling, and the specially designated dividend: An empirical Study. Journal of Financial Economics, 12, pp. 187-209.

Bozos, K., Nikolopoulos, K. and Ramgandhi, G. (2011). Dividend signalling under economic adversity: evidence from the London Stock Exchange. International Review of Financial Analysis, 20, pp.364-374.

Brockman, P. and Unlu, E. (2009). Dividend policy, creditor rights, and the agency costs of debt. Journal of Financial Economics, 92(2), pp. 276-299.

Brockman, P. and Unlu, E. (2011). Earned/contributed capital, dividend policy, and disclosure quality: an international study. Journal of Banking and Finance, 35(7), pp. 1610-1625.

Bulan, L.T. and Subramanian, N. (2008). The firm life cycle theory of dividends, The Blackwell Companion to Dividends and Dividend Policy, H. Kent Baker (ed.), Blackwell.

Byrne, J. and O’Connor, T. (2012). Creditor Rights and the Outcome Model of Dividends. The Quarterly Review of Economics and Finance, 52(2), pp. 227-242.

Campbell, J. Y. and Shiller, R. J. (1988(a)). The dividend–price ratio and expectations of future dividends and discount factors. Review of Financial Studies, 1, pp. 195–227.

Campbell, J. Y. and Shiller, R. J. (1988(b)). Stock prices, earnings, and expected dividends. Journal of Finance, 43, pp. 661–676.

Campbell, J. Y. and Shiller, R. J. (2001). Valuation ratios and the long-run stock market outlook: an update. NBER Working Paper 8221.

Campbell, J. Y. and Yogo, M. (2006). Efficient tests of stock return predictability. Journal of Financial Economics, 81, pp. 27–60.

Campbell, J. Y., Lo, A. W. and MacKinlay, C. (1997). The Econometrics of Financial Markets, Princeton, NJ: Princeton University Press.

Chae, J., Kim, S. and Lee, E. (2009). How corporate governance affects payout policy under agency problems and external financing constraints. Journal of Banking and Finance, 33, pp. 2093–2101.

Chan, C. and Wu, C. (1998). The dynamic of dividends, earnings and stock price: Evidence and implication for dividend smoothing and signalling. Journal of Empirical Finance, 6(1), pp. 29-58.

Chen, L. (2009). On the reversal of return and dividend growth predictability: a tale of two periods. Journal of Financial Economics, 92, pp. 128–151.

Cochrane, J. (2001). Asset Pricing, Princeton, NJ: Princeton University Press.

Cochrane, J. H. (2008). The dog that did not bark. A defence of return predictability. Review of Financial Studies, 21, pp. 1533–1575.

Christie, W.G. (1990). Dividend yield and expected returns: the zero-dividend puzzle. Journal of Financial Economics, 28, pp. 95–125.

Christie, W.G. (1994). Are dividend omissions truly the cruellest cut of all?. Journal of Financial and Quantitative Analysis, 29(3), pp. 459-480.

DeAngelo, H., DeAngelo, L, and Stulz, R.M. (2006). Dividend policy and the earned/contributed capital mix: A test of the life-cycle theory. Journal of Financial Economics, 81, pp.227-254.

DeAngelo, H. and DeAngelo, L., Skinner, D. (1996). Reversal of fortune dividend signalling and the disappearance of sustained earnings growth. Journal of Financial Economics, 40, pp.341–371.

DeAngelo, H. and DeAngelo, L., Skinner, D. (2000). Special dividends and the evaluation of dividend signalling. Journal of Financial Economics, 57, pp.309–354.

DeAngelo, H. and DeAngelo, L., Skinner, D. (2004). Are dividends disappearing? Dividend concentration and the consolidation of earnings. Journal of Financial Economics, 72, pp.425–456.

DeAngelo, H. and DeAngelo, L. (2006). The irrelevance of the MM dividend irrelevance theorem. Journal of Financial Economics, 79, pp.293–315.

DeAngelo, H. and Masulis, R.W. (1980). Optimal capital structure under corporate and personal taxation. Journal of Financial Economics, 8, pp. 3–29.

Denis, D. J. (1990). Defensive changes in corporate payout policy: share repurchases and special dividends. The Journal of Finance, 45(5), pp.1433-1456.

Denis, D.J., Denis, D.K., and Sarin, A. (1994). The information content of dividend changes: cash flow signalling, overinvestment, dividend clienteles. Journal of Financial and Quantitative Analysis, 29, pp.567-587.

Denis, D. K. and McConnell J.J. (2003). International corporate governance, Journal of Financial and Quantitative Analysis, 38(1), pp.1-36.

Denis, D.J. and Osobov, I. (2008). Why do firms pay dividends? International evidence on the determinants of dividend policy. Journal of Financial Economics, 89, pp.62-82.

Duliniec, A. (1998). Struktura i koszt kapita?u w przedsi?ebiorstwie. Warsaw: Wydawnictwo Naukowe pwn.

Duliniec, A. (2007). Finansowanie przedsi?ebiorstwa, Warsaw: Polskie Wydawnictwo Ekonomiczne.

Easterbrook, F.H. (1984). Two Agency-Cost Explanation of Dividends. American Economic Review, 74, pp.650-659.

Edwards, E. O. and Bell, P. W. (1961). The Theory and Measurement of Business Income, Berkeley and Los Angeles, CA: University of California Press.

Eije, H. V. and Megginson, W. L. (2008). Dividends and share repurchases in the European Union, Journal of Financial Economics, 89(2), pp.347-374.

Elton, E. J. and Gruber, M. J. (1970). Marginal stockholder tax rates and the clientele effect. The Review of Economics and Statistics, 52(1), pp.68-74.

Engsted, T. and Pedersen, T. Q. (2010). The dividend–price ratio does predict dividend growth: international evidence. Journal of Empirical Finance, 17, pp. 585–605.

Erasmus P. and Scheepers, R. (2008). The relationship between entrepreneurial intensity and shareholder value creation. Managing Global Transitions, 6(3), pp. 229–56.

Fama, E. and Babiak, H. (1968). Dividend policy: An empirical analysis. Journal of the American Statistical Association, 63(324), pp. 1132-1161.

Fama, E. and Miller, M. (1972). The Theory of Finance. Hinsdale, IL: Dryden Press.

Fama, E. F. and French, K. R. (1988). Dividend yields and expected stock returns. Journal of Financial Economics, 22, pp.3–25.

Fama, E. F. and French, K. R. (1992). The cross-section of expected stock returns. Journal of Finance, 47(2), pp. 427–65.

Fama, E. F. and French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33, pp. 3–56.

Fama, E. F. and French, K. R. (1996). Multifactor explanations of asset pricing anomalies. Journal of Finance, 51, pp. 55–84.

Fama, E. F. and French, K. R. (1998). Value versus growth: the international evidence. Journal of Finance, 53(6), pp. 1975–99.

Fama, E. F. and French, K. R. (2001). Disappearing dividends: changing firm characteristics or lower propensity to pay?. Journal of Financial Economics, 60, pp.3–43.

Fairfield, P.M. (1994). P/E, P/B and the present value of future dividends. Financial Analysts Journal, pp. 23-31.

Ferris, S. P., Sen, N. and Unlu, E. (2009). An international analysis of dividend payment behaviour. Journal of Business Finance & Accounting, 36(3-4), pp.496–522.

Ferris, S. P., Noronha, G. and Unlu, E. (2010). The more, the merrier: an international analysis of the frequency of dividend payment. Journal of Business Finance & Accounting, 37(1-2), pp.148–170.

Ferris, S. P., Sen, N. and Yui, H. P. (2006). God save the queen and her dividends: Corporate payouts in the UK. Journal of Business, 79, pp.1149-1173.

Franc-Dabrowska, J. (2009). Does dividend policy follow the capital structure theory?. Managing Global Transitions, 7 (4), pp. 367-382.

Garret, I. and Priestley, R. (2000). Dividend behaviour and dividend signalling. Journal of Financial and Quantitative Analysis, 35(2), pp.173-189.

Gombola, M. J. and Liu, F.Y. (1993). Considering dividend stability in the relation between dividend yields and stock returns. Journal of Financial Research, 16, pp. 139-50.

Gonedes, N.J. (1978). Corporate signalling, external accounting, and capital market equilibrium: evidence on dividends, income, and extraordinary items. Journal of Accounting Research, 16, pp.26–79.

Gombola, M. J. and Liu, F.Y. (1993). Considering dividend stability in the relation between dividend yields and stock returns. Journal of Financial Research, 16, pp.139-50.

Gordon, M. J. (1963). Optimal investment and financing policy. The Journal of Finance, 18(2), pp.264-272.

Gorman, L. R., Weigand, R. A. and Zwirlein, T. J. (2004). The information content of dividend resumptions. Studies in Economics and Finance, 22(2), pp.70-99.

Graham, J. R. (1996). Debt and the marginal tax rate. Journal of Financial Economics, 41, pp.41–73.

Graham, F. and Isaac, A.G. (2002). The behavioural life-cycle theory of consumer behaviour: Survey evidence. Journal of Economic Behavior & Organization, 48, pp.391-401.

Graham, J. R. and Tucker, A. L. (2006). Tax shelters and corporate debt policy, Journal of Financial Economics, 81, pp.563–594.

Grossman, S.J. and Hart, O.D. (1980). Takeover bids, the free-rider problem, and the theory of the corporation. Bell Journal of Economics, 11, pp. 42–54.

Griffin, P. A. (1976). Competitive information in the stock market: an empirical study of earnings, dividends and analysis’ forecasts. The Journal of Finance, 31(2), pp.631-650.

Grinblatt, M., Masulis, R.W. and Titman, S. (1984). The valuation effects of stock splits and stock dividends. Journal of Financial Economics, 13, pp.97-112.

Grossman, S.J. and Hart, O.D. (1980). Takeover bids, the free-rider problem, and the theory of the corporation. Bell Journal of Economics, 11, pp.42–54.

Grullon, G., and Michaely, R. (2002). Dividends, share repurchases, and the substitution hypothesis. The Journal of Finance, 57, pp.1649-1684.

Grullon, G., Michaely, R. and Swaminathan, B. (2002). Are dividend changes a sign of firm maturity?. The Journal of Business, 75, pp.387-424.

Grullon, G., Michaely, R., Benartzi, S. and Thaler, R. H. (2005). Dividend changes do not signal changes in future profitability. Journal of Business, 78(5), pp.1659-1682.

Hanlon, M. and Hoopes, J. L. (2014). What do firms do when dividend tax rates change? An examination of alternative payout responses. Journal of Financial Economics, 114 (1), pp. 105-124.

Hasan, F. (2021). Dividend changes as predictors of future profitability. The Journal of Prediction Markets. 15(1), pp. 37-66.

Haugen, R. A. and Senbet, L. W. (1978). The insignificance of bankruptcy costs to the theory of optimal capital structure. Journal of Finance, 33, pp. 383-393.

Haugen, R. A. and Senbet, L. W. (1986). Corporate finance and taxes: a review. Finance Manage, 15, pp. 5–21.

Hauser, R. (2013). Did dividend policy change during the financial crisis? Managerial Finance, 39(6), pp. 584-606.

Healy, P. M. and Palepu, K. G. (1988). Earnings information conveyed by dividend initiations and omissions. Journal of Financial Economics, 21, pp.149–175.

Hjalmarsson, E. (2010). Predicting global stock returns. Journal of Financial and Quantitative Analysis, 45, pp. 49–80.

Ho, K. S. and Wu, C. (2001). The earnings information content of dividend initiations and omissions. Journal of Business Finance and Accounting, 28(7-8), pp. 963-977.

Ho, H. (2003). Dividend policies in Australia and Japan. International Advances in Economic Research, 9(2), pp. 91–100.

Hobbs, J. and Schneller, M. I. (2012). Dividend signalling and sustainability. Applied Financial Economics, 22, pp.1395-1408.

Holder, M.E., Langrehr, F.W. and Hexter. J.L. (1998). Dividend policy determinants: an investigation of the influences of stakeholder theory. Financial Management, 27(3), pp. 73–82.

Howe, K. M., He, J., and Kao, G. W. (1992). One-time cash flow announcements and free cash flow theory: share repurchase and special dividends. Journal of Finance, 47, pp.1963-1974.

Huang, S.G. and Song, F.M. (2006). The determinants of capital structure: Evidence from China. China Economic Review, 17, pp. 14–36.

Ishikawa, H. (2011). Empirical analysis on the dividend life-cycle theory: evidence from Japan. The Japanese Accounting Review, 1, pp.40-60.

Jacob, M. and Michaely, R. (2017). Taxation and dividend policy: The muting effect of agency issues and shareholder conflicts. The Review of Financial Studies, 30 (9), pp. 3176-3222

Jensen, M. and Meckling, W. (1976). Theory of the firm: managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, pp.305–360.

Jensen, M. (1986). Agency costs of free cash flow, corporate finance and takeovers. The American Economic Review, 76, pp.323–329.

Jensen, G. R., Solberg, D. P. and Zorn, T. S. (1992). Simultaneous determination of insider ownership, debt, and dividend policies. Journal of Financial and Quantitative Analysis, 27(2), pp.247?263.

Jiraporn, P., Kim, Y.S. Davidson, W.N. and Singh, M. (2006). Corporate governance, shareholder rights and firm diversification: An empirical analysis. Journal of Banking and Finance,.30, pp.947–963.

Jiraporn, P. and Ning, Y. (2006), Dividend policy, shareholder rights, and corporate governance. Journal of Applied Finance, 16(2), pp.24-36.

Jirporn, P., Kim, J. and Kim, Y. (2011). Dividend payouts and corporate governance quality: an empirical investigation. The Financial Review, 46, pp.251-279.

Jo, H. and Pan, C. (2009). Why are firms with entrenched managers more likely to pay dividends?. Review of Accounting and Finance. 8, pp. 87–116.

John, K. and Knyazeva, A. (2006). Payout policy, agency conflicts, and corporate governance. Working Paper, New York University.

Julio, B. and Ikenberry, D. L. (2004). Reappearing dividends. Journal of Applied Corporate Finance, 16, pp.89-100.

John, K. and Williams, J. (1985). Dividend, dilution, and taxes: a signalling equilibrium. Journal of Finance, 40, pp.1053-1070.

Jumming, H., Xu-Ming, W. and Chunchi, W. (1998). The Role of Earnings Information in Corporate Dividend Decisions. Management Science, 44(12), pp. 173-191.

Kane, A., Lee, Y. and Marcus, A. (1984). Earnings and dividend announcements: Is there a corroboration effect?. Journal of Finance, 39, pp.1091–1099.

Kalay, A. and Loewensrein, U. (1985). Predictable events and excess returns: The case of dividend announcements. Journal of Financial Economics, 14, pp.423–449.

Kale, J. R. and Neo, T. H. (1990). Dividend, uncertainty, and underwriting costs under asymmetric information. Journal of Finance, 39, pp.265-277.

Keim, D. B. (1985). Dividend yields and stock returns: implications of abnormal January returns. Journal of Financial Economics, 14, pp. 473–89.

Keim, D. B. (1986), Dividend yields and the January Effect. Journal of Portfolio Management, 12, pp. 54-60.

Knight, F. H. (1921). Risk, Uncertainty, and Profit. New York: Hart, Schaffner, and Mary.

Lamont, O. (1998). Earnings and expected returns. Journal of Finance, 53(5), pp.1563–87.

Lang, L. and Litzenberger, R. (1989). Dividend announcements: Cash-flow signalling vs free cash flow hypothesis?. Journal of Financial Economics, 24, pp.181–191.

Lanne, M. (2002). Testing the predictability of stock returns. Review of Economics and Statistics, 84, pp.407–415.

La Porta, R., Lopez-de-Silanes, F., Shleifer, A. and Vishny. (1997). Legal determinants of external capital. Journal of Finance, 52, pp.1131-1150.

La Porta, R., Lopez-de-Silanes, F., Shleifer, A. and Vishny. (2000). Agency problems and dividend policies around the world. Journal of Finance, 55, pp.1-33.

Lee, C. F., Wu, C. and Djarraya, M. (1987). A further empirical investigation of the dividend adjustment process. Econometrics, 35, pp. 267-285.

Levis, M. (1989). ‘Stock market anomalies – A re-assessment based on the UK evidence’. Journal of Banking and Finance, 13, pp. 675–96.

Li, O.Z., Liu, H., Ni, C. and Ye, K. (2017). Individual investors' dividend taxes and corporate payout policies. Journal of Financial and Quantitative Analysis, 52 (3), pp. 963-990.

Li, W. and Lie, E. (2006). Dividend changes and catering incentives. Journal of Financial Economics, 80, pp.293-308.

Lie, E. (2000). Excess funds and agency problems: an empirical study of incremental cash disbursements. Review of Financial Studies, 13(1), pp. 219-248.

Lintner, J. (1956). Distribution of incomes of corporations among dividends retained earnings and taxes. American Economic Review, 46, pp.97-113.

Litzenberger, R. H. and Ramaswamy, K. (1979), The effect of personal taxes and dividends on capital asset prices: theory and empirical evidence. Journal of Financial Economics, 7, pp. 163–95.

Mazur, K. (2007). The determinants of capital structure choice: evidence from Polish companies. International Advances in Economic Research, 13(4), pp.495–514.

McManus, I., Gwilym, O. A. and Thomas, S. (2004). The role of payout ratio in the relationship between stock returns and dividend yield. Journal of Business Finance and Accounting, 31(9-10), pp.1355-1387.

McManus, I., Gwilym, O. A. and Thomas, S. (2006). Payment history, past returns and the performance of UK zero dividend stocks. Managerial Finance, 32(6), pp.518–36.

McMillan, D. G. and Wohar, M. E. (2013). A panel analysis of the stock return-dividend yield relation: Predicting returns and dividend growth. The Manchester School, 81(3), pp. 386-400.

Michaely, R., Thaler, R. H. and Womack, K.L. (1995). Price reactions to dividend initiations and omissions: overreaction or drift?. Journal of Finance, 50, pp.573-608.

Miller, M., and Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 34, pp.411-433.

Miller, M. and Modigliani, F. (1966). Some estimates of the cost of capital to the electric utility industry. American Economic Review, 56 (3), pp.333–391.

Miller, M. and Scholes, M. (1982). Dividends and taxes: some empirical evidence. Journal of Political Economy, 90(6), pp.1118–41.

Miller, M. and K. Rock. (1985). Dividend policy under asymmetric information. Journal of Finance, 40, pp.1031–52.

Mitton, T. (2004). Corporate governance and dividend policy in emerging markets. Emerging Markets Review, 5, pp.409-426.

Modigliani, F. and Miller, M. (1958). The cost of capital corporation finance and the theory of investment. American Economic Review, 48(3), pp.261-97.

Modigliani, F. and Miller, M. (1961). Dividend policy, growth and the valuation of shares. The Journal of Business, 34(4), pp.411–33.

Modigliani, F. and Miller, M. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), pp.433–43.

Modigliani, F. and Cohn, R. (1979). Inflation, rational valuation and the market. Financial Analysts Journal, pp.24-44.

Mondher, K., (2011). A re-examination of the MM capital structure irrelevance theorem: A partial payout approach. International Journal of Business and Management, 6(10), pp. 193-204.

Morgan, G. and S.H. Thomas. (1998). Taxes, dividend yields and returns in the UK equity market. Journal of Banking and Finance, 22(40), pp. 405–23.

Mueller, D. C. (1972). A life cycle theory of the firm. Journal of Industrial Economics, 20(3), 199–219.

Myers, S. (1984). The capital structure puzzle. Journal of Finance, 39(3), pp.575–92.

Myers, S. and Majluf, N. (1984). Corporate investment and financing policies when firms have information that investors do not have. Journal of Financial Economics, 13, pp.187–222.

Nielsen, A.E.B. (2006). Corporate governance, leverage, and dividend policy. Working paper, Princeton University.

Nissim, D. and Ziv, A. (2001). Dividend changes and future profitability. The Journal of Finance, 56(6), pp.2111-2133.

O’Connor, T. (2013). Dividend payout, corporate governance, and the enforcement of creditor rights in the emerging markets. Journal of Corporate Governance, 12(1), pp. 7-34.

Ofer, A. R. and Thakor, A. V. (1987). A theory of stock price responses to alternative corporate cash disbursement methods: stock repurchase and dividends. The Journal of Finance, 42(2), pp. 365-394.

Officer, M.S. (2007). Dividend policy, dividend initiations, and governance. Working paper, University of Southern California.

Park, C. (2010). When does the dividend–price ratio predict stock returns?. Journal of Empirical Finance, 17, pp. 81–101.

Penman, S. (1983). The predictive content of earnings forecasts and dividends. Journal of Finance, 38, pp.1181–1199.

Pettit, R. R. (1972). Dividend announcements, security performance, and capital market efficiency. Journal of Finance, 27, pp.993–1007.

Quan, V. D. H. (2002). A rational justification of the pecking order hypothesis to the choice of sources of financing. Management Research News, 25(12), pp.74–90.

Ramalingegowda, S., Wang, C. and Yu, Y. (2013). The role of financial reporting quality in mitigating the constraining effect of dividend policy on investment decisions. The Accounting Review, 88(3), pp.1007-1039.

Sawicki, J. (2009), Corporate governance and dividend policy in southeast Asia pre-and post-crisis. European Journal of Finance, 15(2), pp. 211-230.

Scholz, J.K. (1992). A direct examination of the dividend clientele hypothesis. Journal of Public Economics, 49, pp. 261–85.

Schumpeter, J. A. (1934). The Theory of Economic Development. Cambridge, MA: Harvard University Press.

Shao, L., Kwok, C. and Guedhami, O. (2009), Dividend policy: balancing interests between shareholders and creditors. Working Paper, Moore School of Business, University of South California.

Shefrin, H. M. and Stateman, M. (1984). Explaining investor preference for cash dividends. Journal of Financial Economics, 13, pp.253-282.

Shefrin, H. M. and Thaler, R. H. (1988). The behaviour life-cycle hypothesis. Economic Inquiry, pp.609-643.

Thaler, R. H. and Shefrin H. M. (1984). Explaining investor preference for a cash dividend. Journal of Financial Economics, 13, pp.253-282.

Thanatawee, Y. (2011). Life-cycle theory and free cash flow hypothesis: evidence from dividend policy in Thailand. International Journal of Financial Research, 2(2), pp.52-60.

Theobald, M. (1979). Capital asset pricing: theory, empirics and implications for portfolio management. Managerial Finance, 5(1), pp. 57–64.

Titman, S. and Wessels, R. (1988). The determinants of capital structure choice. Journal of Finance, 43(1), pp.1–19.

Tsuji, C. (2012). A discussion on the signalling hypothesis of dividend policy. The Open Business Journal, 5, 1-7.

Valkanov, R. (2003). Long-run regressions: theoretical results and applications. Journal of Financial Economics, 68, pp. 201–232.

Watts, R. (1973). The information content of dividends. Journal of Business, 46, pp.191–211.

Wolf, M. (2000). Stock returns and dividend yields revisited: a new look at an old problem. Journal of Business Economics and Statistics, 18, pp. 18–30.

Yoon, P. S. and Starks, L. T. (1995). Signalling, investment opportunities and dividend announcements. Review of Financial Studies, 8, pp.995-1018.

Yu, X., Wang, Y., Chen, Y. and Wang, G. (2021). Dividend payouts and catering to demands: Evidence from a dividend tax reform. International Review of Financial Analysis. (In Press), 101841.

Downloads

Published

2021-01-01

How to Cite

Hasan, F. (2021). Relationship between Orthodox Finance and Dividend Policy: A Literature Review. Indian-Pacific Journal of Accounting and Finance, 5(1), 13–40. https://doi.org/10.52962/ipjaf.2021.5.1.122

Issue

Section

Main Section