Managerial Ownership and Catering to Investor Sentiment for Dividends : Evidence from the Electromechanical Industry Sector on the Warsaw Stock Exchange

• Autorzy: Aleksandra Pieloch-Babiarz
• Języki publikacji: EN

Abstrakty

EN

Research background: Dividends have been the subject of scientific research for decades. However, many aspects of payout policy are still controversial, and research provides contradictory results. One research area is the impact of the ownership structure on dividend policy. Although many scientific studies on this subject have been conducted, there is still a lack of research on the impact of managerial ownership on adjusting the dividend payout to investor sentiment. It was this research gap that motivated us to investigate the issue.
Purpose of the article: The aim of the paper is to evaluate how managerial ownership affects the disposition of companies to adjust their dividend payouts to investor sentiment. Achieving that objective provides stock market investors with additional information and allows for its practical implications as they seek the best investment opportunities.
Methods: The main method of investigation is a panel regression model with random effects. This model is used based on the Breusch-Pagan test and the Hausman test, while the information criteria of Akaike, Schwarz, and Hannan-Quinn are also taken into consideration. Additionally, descriptive statistics and the Pearson correlation coefficient are used. The research sample consists of Polish companies from the electromechanical industry sector that are listed on the main market of the Warsaw Stock Exchange (WSE) in the period 2009-2018.
Findings & Value added: Our findings reveal that: 1) an increase in dividend premium results in a higher payout in order to cater to investor sentiment; 2) if the manager holds the greatest number of shares, the catering effect weakens. The main contribution of the paper is a new approach to the catering theory of dividends, which includes the impact of managerial ownership. (original abstract)

Słowa kluczowe

EN

Dividend; Dividend policy

PL

Dywidenda; Polityka dywidend

• Czasopismo: Oeconomia Copernicana
• Rocznik: 2020
• Tom: 11
• Numer: nr 3
• Strony: 467--483

Twórcy

autor

Aleksandra Pieloch-Babiarz

• University of Lodz, Poland

Bibliografia

• Aluchna, M., Berent, T., & Kamiński, B. (2019). Dividend payouts and shareholder structure: evidence from the Warsaw Stock Exchange. Eastern European Economics, 57(3). doi: 10.1080/00128775.2019.1568196.
• Baker, M., & Wurgler, J. (2004a). A catering theory of dividends. Journal of Finance, 59. doi: 10.1111/j.1540-6261.2004.00658.x.
• Baker, M., & Wurgler, J. (2004b). Appearing and disappearing dividends: the link to catering incentives. Journal of Financial Economics, 73(2). doi: 10.1016/j.jfineco.2003.08.001.
• Bałtowski, M. (2017). More control than ownership: state as a specific investor on Warsaw Stock Exchange. Economic Studies, 1(92).
• Bhattacharyya, N. (2007). Dividend policy: a review, Managerial Finance, 33(1). doi: 10.1108/03074350710715773.
• Bojańczyk, M. (2010). Managers and owners on the capital market. Company management crisis. Warszawa: Difin.
• Cottrell, A., & Lucchetti, R. (2019). Gretl user's guide. Retrieved from http://gretl.sourceforge.net/gretl-help/gretl-guide.pdf (30.07.2019).
• De Rooij, M., & Renneboog, L. (2009). The catering theory of dividends. In: H. K. Baker (Ed.). Dividends and dividend policy. Hoboken: John Wiley & Sons.
• DeAngelo, H., DeAngelo, L., & Stulz, R. (2006). Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory. Journal of Financial Economics, 81(2). doi: 10.1016/j.jfineco.2005.07.005.
• Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. American Economic Review, 74(4).
• Eije H., & Megginson, W. E. (2008). Dividends and share repurchases in the European Union. Journal of Financial Economics, 89.
• Fama, E. F., & French, K. F. (2001). Disappearing dividends: changing firm characteristics or lower propensity to pay? Journal of Financial Economics, 60(1).
• Ferris, S. P., Sen, N., & You, H. P. (2006). God save the queen and her dividends: corporate payouts in the UK. Journal of Business, 79(3).
• Florackis, C., Kanas, A., & Kostakis, A. (2015). Dividend policy, managerial ownership and debt financing: a non-parametric perspective. European Journal of Operational Research, 241(3). doi: 10.1016/j.ejor.2014.08.031.
• Gajdka, J. (2013). Behavioural corporate finance. Lodz: Publisher of the University of Lodz.
• Hsiao, C. (2003). Analysis of panel data. Cambridge-New York: Cambridge University Press.
• Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4). doi: 10.1016/0304-405X(76)90026-X.
• Jensen, G. R., Solberg, D. P., & Zorn, T. S. (1992). Simultaneous determination of insider ownership, debt and dividend policies. Journal of Financial and Quantitative Analysis, 27(2). doi: 10.2307/2331370.
• Jiang, Z., Kim, K. A., Lie, E., & Yang, S. (2013). Share repurchases, catering, and dividend substitution. Journal of Corporate Finance, 21. doi: 10.1016/j.jcorpfin.2013.01.004.
• Julio, B., & Ikenberry, D. (2004). Reappearing dividends. Journal of Applied Corporate Finance, 16(4). doi: 10.1111/j.1745-6622.2004.00010.x.
• Kaźmierska-Jóźwiak, B. (2015). Is the catering theory of dividend applicable to the Polish market? Finances, Financial Markets, Insurance, 74(1). doi: 10.18276/frfu.2015.74/1-05.
• Konieczka, P., & Szyszka, A. (2013). The catering theory of dividends on the US stock markets. Journal of Management and Finance, 2(2).
• Kulchania, M. (2013). Catering driven substitution in corporate payouts. Journal of Corporate Finance, 21. doi: 10.1016/j.jcorpfin.2013.02.003.
• Lace N., Bistrova J., & Kozlovskis K. (2013). Ownership type influence on dividend payments in CEE countries. Business: Theory and Practice, 14(3). doi: 10.3846/btp.2013.27.
• La Porta, R., Lopez, F., Shleifer A., &Vishny, R. (2000). Agency problems and dividend policies around the world. Journal of Finance, 55(1).
• Li, W., & Lie, E. (2006). Dividend changes and catering incentives. Journal of Financial Economics, 80(2). doi: 10.1016/j.jfineco.2005.03.005.
• Michaely, R., & Roberts, M. R. (2012). Corporate dividend policies: lessons from private firms. Review of Financial Studies, 25(3).
• Neves, E. D. (2014). Ownership structure and investor's sentiment for dividend. International Journal of Financial Research, 5(2). doi: 10.5430/ijfr.v5n2p35.
• Pieloch-Babiarz, A. (2015). Catering approach to the dividend payment policy on the Warsaw Stock Exchange. Equilibrium. Quarterly Journal of Economics and Economic Policy, 10(2). doi: 10.12775/EQUIL.2015.019.
• Rozeff, M. S. (1982). Growth, beta and agency costs as determinants of dividend payout ratios. Journal of Financial Research, 5(3).
• Shleifer, A., & Vishny, R. W. (1986). Large shareholders and corporate control. Journal of Political Economy, 94(3).
• Short, H., Zhang, H., & Keasey, K. (2002). The link between dividend policy and industrial ownership. Journal of Corporate Finance, 8(2).
• Smith, D. D., Pennathur, A. K., & Marciniak, M. R. (2017). Why do CEOs agree to the discipline of dividends? International Review of Financial Analysis, 52. doi: 10.1016/j.irfa.2017.04.010.
• Tsuji, C. (2010). A test of the catering theory of dividends: the case of the Japanese electric appliances industry. Journal of Management Research, 2(2). doi: 10.5296/jmr.v2i2.371.
• Yurtoglu, B., & Gugler K. (2003). Corporate governance and dividend pay-out policy in Germany. European Economic Review, 47(4). doi: 10.1016/S0014-2921(02)00291-X.

Identyfikatory

DOI

10.24136/oc.2020.019