• Title, Summary, Keyword: Policy Leverage

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Corporate Board Attributes and Dividend Pay-out Policy: Mediating Role of Financial Leverage

  • TAHIR, Hussain;MASRI, Ridzuan;RAHMAN, Mahfuzur
    • The Journal of Asian Finance, Economics and Business
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    • v.7 no.1
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    • pp.167-181
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    • 2020
  • The relationship between corporate board attributes and dividend payout is already established yet mediating role of leverage in not been examined in Malaysian market. Therefore, this study aims to examine the mediating effect of financial leverage on the relationship between corporate board attributes and the dividend pay-out policy. A sample of 203 non-financial firms listed on the BURSA Malaysia between 2005 and 2018 were analysed using SmartPLS 3.0. The findings show that there is a partial mediating effect of financial leverage on the relationship between board members age, board diversity and dividend pay-out policy. Financial leverage also mediates the relationship between number of women on board, CEO-duality and dividend pay-out policy. However, financial leverage doesn't mediate the relationship between board size and dividend pay-out policy. This study offers insights to policy-makers to develop a better corporate governance as well as a guidance to firms in the construction and implementation of their corporate governance policies in relation to financial leverage. This study also shed light on the influence of efficient corporate board attributes on dividend pay-out policy and financial leverage for firm growth. This study concludes that corporate board attributes impact capital structure and thus, firms may change its payout policy.

Bank Dividend Policy and Degree of Total Leverage

  • TRAN, Dung Viet
    • The Journal of Asian Finance, Economics and Business
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    • v.7 no.2
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    • pp.53-64
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    • 2020
  • We provide one of the first investigation on the impact of the degree of total leverage to the dividend policy of bank. We use a large sample of US bank holding companies from 2000:Q1 to 2017:Q4 to shed light our research question. Our empirical analysis provides consistent evidence that banks with high degree of total leverage (i.e. banks with a relatively high fixed-to-variables costs) are less likely to pay dividends, and they spend a lower fraction of incomes to pay back shareholders, suggesting a higher conservatism in dividend policy of banks subject to high degree of total leverage. The evidence remains unchanged with alternative econometric approaches, alternative measures of dividend policy and degree of total leverage. We further document that this higher conservatism is strengthened for a sample of banks with low franchise value during the financial crises. Our result suggests that the conservatism in dividend policy of banks with high degree of total leverage seems to be related to the precautionary motives aimed at preserving corporate resources under financial distress. Our study contributes to the literature of cost structure and dividend policy by pointing out that the impacts of the degree of fixed-to-variable expenses to dividend policy are extended to the case of banks.

Critical Success Factors of RTE Based on Policy Leverage of System Dynamics (시스템 다이내믹스의 정책지렛대를 활용한 RTE 핵심성공요인 도출에 관한 연구)

  • Jung, Jae-Un;Kim, Hyun-Soo;Choi, Hyung-Rim;Hong, Soon-Goo
    • The Journal of Information Systems
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    • v.16 no.4
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    • pp.177-194
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    • 2007
  • This study is intended to identify critical success factors(CSF) of real-time enterprises(RTE) by using a policy leverage method of system dynamics. Since RTE is a new theoretical system that unifies existing theories or concepts in business management and information technology, it is not proper to employee a traditional statistical method. To obtain our research goal, causal maps of system dynamics are employed to abstract and arrange RTE information from previous studies. By using the commonness of policy leverage and critical success factors, CSFs for the RTE are deduced by substituting the leverage points on causal maps with necessary success factors to solve the problems. Since this is a new approach to identify success factors. it has some restrictions. Unlike the statistical methods, this approach explains only the directions of causalities and correlations. For the future research, a simulation tool of system dynamics can be employed to discover how each CSF is correlated to the successful implementation of RTE.

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Analysis of Policy Leverages Linked to Functional Changes of Local Educational Authority: Application of Systems Thinking (시스템 사고를 활용한 지역교육청 기능전환정책의 정책 지렛대(Policy Leverage) 분석)

  • Choi, Young-Chool;Park, Soo-Jung
    • Korean System Dynamics Review
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    • v.11 no.1
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    • pp.85-102
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    • 2010
  • This paper explores the ways in which the functions of local educational authority in Korea can be analyzed by systems thinking, and puts forward some policy leverage strategies to enhance predictability of education policy effects and also to prevent unanticipated side effects arising from it. In dong so, we sketch causal diagrams to depict functional changes of local educational authority, based on before and after comparison, and attempt to derive policy intervention points to minimize unforseen reactions from the stake-holders concerned. These diagrams make it possible for educational policy-makers to capture the feedback, stocks and flows, time delays, and non-linearities they identify, although they have some limitations. This paper concludes that newly-designed functions and structures for local educational authority may be accepted by the stake-holders including teachers and unions, only if complex systems surrounding functional changes regarding local educational authority can be clearly understood and relevant policy measures can be effectively taken before the functional changes happen.

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Growth Opportunities, Capital Structure and Dividend Policy in Emerging Market: Indonesia Case Study

  • DANILA, Nevi;NOREEN, Umara;AZIZAN, Noor Azlinna;FARID, Muhammad;AHMED, Zaheer
    • The Journal of Asian Finance, Economics and Business
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    • v.7 no.10
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    • pp.1-8
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    • 2020
  • The objective of the study is to investigate the effect of growth opportunities on capital structure and dividend policy in Indonesia. The study employs panel data of companies listed on Indonesia Stock Exchange that distribute dividends from 2007 to 2017. Fixed and random effect regression models are used. Findings based on growth opportunities on capital structure and dividend policy in Indonesia are in line with the existing theory (i.e., contracting theory). Growth opportunities have a significant negative correlation with debt ratio and dividend yield, which suggests that firms with high growth opportunities are discouraged to generate debt to resolve underinvestment and asset-substitution problem. Firms with more investment opportunities tend to adopt a low dividend payout policy because the cash flows will be used up for investment. The positive impact of firm size on leverage is due to the low bankruptcy risk and cost of a large company. Profitability has a positive impact on the dividend policy because profitable companies can reserve larger free cash flows and, thus, pay higher dividends. The positive influence of ownership on leverage is interpreted by the unwillingness of majority stockholders to commit to equity financing in order to avoid reducing the ownership and preserve control of the company.

An Empirical Study of Two Different Groups of Zero Leverage Firms in Korea: Firms with Financial Constraints and Firms with Debt Avoidance for Future Investment (국내 무부채 기업의 두 종류 기업군에 관한 실증적 연구: 재정적 제약을 갖고 있는 그룹과 재무적 유연성을 추구하는 그룹)

  • Yang, Insun
    • Journal of the Korea Academia-Industrial cooperation Society
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    • v.21 no.11
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    • pp.804-813
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    • 2020
  • This paper finds that Korean zero-leverage firms are not homogeneous. By conducting both univariate and multivariate logit regression analysis, this paper finds that Korean zero-leverage firms have zero leverage as either a consequence of financial constraints or because of a strategic decision to mitigate under-investment incentives and preserve financial flexibility. There are two distinct groups of unlevered firms with different levels of constraints as measured by their dividend policy, namely dividend payers and non-payers. Importantly, this paper finds new evidence that these two groups have different motives for selecting a zero leverage policy. Firms in the first group (non-payers) have zero leverage, mainly due to financial constraints. They rely heavily on their internal funds and consequently invest in fewer growth opportunities than their levered counterparts. Firms in the second group (payers) deliberately avoid debts and preserve financial flexibility to mitigate investment distortions, as predicted by the under-investment and financial flexibility hypotheses.

Corporate Governance Strength and Leverage: Empirical Evidence from Jordan

  • ALGHADI, Mohammad Yousef;AlZYADAT, Ayed Ahmad Khalifah
    • The Journal of Asian Finance, Economics and Business
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    • v.8 no.7
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    • pp.245-254
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    • 2021
  • This paper examines the impact of corporate governance strength on capital structure in an emerging country, namely, Jordan, by constructing a corporate governance score that captures both internal monitoring mechanisms (foreign ownership and institutional ownership) and external monitoring mechanism (audit fees). In addition, this study uses profitability as control variable. This paper uses data of non-financial companies (industrial and services) of 87 listed firms on Amman Stock Exchange (ASE) from 2011 to 2019. Using the random-effects generalized least square (GLS) regression model, the findings reveal that foreign ownership significantly and negatively influences the level leverage, while institutional ownership has a positive and insignificant association with level leverage. Further, audit fees have a positive and strong significant association with level leverage in Jordan. In addition, profitability has a positive and significant association with leverage. These outcomes suggest that foreign ownership should be encouraged in listed companies as it can replace the weakness of other corporate governance mechanisms in Jordan. The outcomes of the current study should be of great interest to regulators and policy-makers. The results, which are robust to a range of alternative proxies and to additional tests, provide new insights into the determinants of level leverage.

Do Firm Characteristics Determine Capital Structure of Pakistan Listed Firms? A Quantile Regression Approach

  • KHAN, Karamat;QU, Jing;SHAH, Muhammad Haroon;BAH, Kebba;KHAN, Irfan Ullah
    • The Journal of Asian Finance, Economics and Business
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    • v.7 no.5
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    • pp.61-72
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    • 2020
  • The purpose of this study is to investigate the determinants of the capital structure of firms operating in a developing economy, Pakistan. The quantile regression method is applied on a sample of 183 non-financial companies listed on the Pakistan Stock Exchange during the period of 2008-2017. Specifically, the empirical analysis focuses on changes in the coefficients of the determinants according to the leverage ratio quantiles of the examined listed firms. The findings show that the capital structure of Pakistan listed firms differs between firms in different quantiles of leverage. These differences are significant with the sign of explanatory variables changes with the level of leverage. The research result found tangibility, profitability and age to be positively related to leverage among listed firms in Pakistan. However, size, liquidity and non-debt tax shield (NDTS) are negatively related to leverage. A firm's growth and risk are found to be insignificant predictors of capital structure in Pakistan listed firms. Moreover, the study also found a significant impact of industry characteristic on leverage. The findings of this study indicate that an individual firm's finance policy needs to be responsive to the firm's characteristics and should match with the different borrowing requirements of listed firms.

Determinants of Dividend Payout: Evidence from listed Oil and Gas Companies of Pakistan

  • Tahir, Muhammad;Mushtaq, Muhammad
    • The Journal of Asian Finance, Economics and Business
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    • v.3 no.4
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    • pp.25-37
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    • 2016
  • This study aims to investigate the determinants of dividend payout of Oil and Gas industry of Pakistan using secondary data from published annual reports from 2008 to 2014 listed on KSE (Karachi Stock Exchange). Dividend payout can be affected by profitability, firm size, financial leverage, sales growth, investment opportunities, liquidity, business risk, and ownership structure. Panel data technique used due to panel characteristics of available data with ordinary least square regression model to find out the impact of set of explanatory variables on the dividend payout using the Stata. Financial leverage, sales growth and business risks are the most significant variables of the study where financial leverage and business risk have significant negative effect on dividend payout while sales growth has favorable positive impact on dividend payout. Results revealed significant positive link of profitability and firm size with dividend payout whereas government ownership is negatively associated with dividend payout. Investment opportunities, liquidity and managerial ownership showed insignificant relationship with dividend payout. This Suggests that dividend payout policy is dependent on business strategies including both investment and financing decisions. Financial managers should consider these factors while formulating dividend policy of the firm.

Development of a system dynamics computer model to simulate the operational effects of the new environmental technology certification system (환경신기술인증제도의 운영효과를 모의하기 위한 시스템다이내믹스 컴퓨터 모델의 개발)

  • Kim, Taeyoung;Park, Suwan
    • Journal of Korean Society of Water and Wastewater
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    • v.34 no.2
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    • pp.105-114
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    • 2020
  • In this study, based on the System Dynamics (SD) methodology, the interrelationship between the factors inherent in the operation of the New Technology Certification System (NTCS) in Korea was identified by a causal map containing a feedback loop mechanism in connection with 'new technology development investment', 'commercialization of new technology', and 'sales by new technology'. This conceptualized causal map was applied to the simulation of the operations of the New Excellent Technology and Environmental Technology Verification System (NET&ETV) run by the Ministry of Environment among various NTCSs in Korea. A SD computer simulation model was developed to analyze and predict the operational performance of the NET&ETV in terms of key performance indices such as 'sales by new technology'. Using this model, we predicted the future operational status the NET&ETV and found a policy leverage that greatly influences the operation of the NET&ETV. Also the sensitivity of the key indicators to changes in the external variables in the model was analyzed to find policy leverage.