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Does mandating disclosure on dividend payout policy benefit shareholder?

Author

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  • Kumari, Pratibha
  • Pathak, Rajesh

Abstract

Shareholders constantly face the challenge of determining optimal dividends. While other emerging markets rely on fixed dividend regulations to ensure shareholders’ right for dividends, India adopts a disclosure-based approach. SEBI's regulation 43(A), 2016, mandates Indian firms to disclose their dividend distribution policies. We show that mandating firms to disclose their dividend distribution policies is an effective approach as it leads to a noticeable increase in both the probability and amount of dividend payouts.

Suggested Citation

  • Kumari, Pratibha & Pathak, Rajesh, 2024. "Does mandating disclosure on dividend payout policy benefit shareholder?," Economics Letters, Elsevier, vol. 236(C).
    • Handle: RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524000703
    DOI: 10.1016/j.econlet.2024.111587
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    References listed on IDEAS

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    1. Luzi Hail & Ahmed Tahoun & Clare Wang, 2014. "Dividend Payouts and Information Shocks," Journal of Accounting Research, Wiley Blackwell, vol. 52(2), pages 403-456, May.
    2. Eugene F. Fama, 2002. "Testing Trade-Off and Pecking Order Predictions About Dividends and Debt," The Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 1-33, March.
    3. Rafael La Porta & Florencio Lopez‐de‐Silanes & Andrei Shleifer & Robert W. Vishny, 2000. "Agency Problems and Dividend Policies around the World," Journal of Finance, American Finance Association, vol. 55(1), pages 1-33, February.
    4. Alexandros Sikalidis & Konstantinos Bozos & Antonios Chantziaras & Christos Grose, 2022. "Influences of family ownership on dividend policy under mandatory dividend rules," Review of Quantitative Finance and Accounting, Springer, vol. 59(3), pages 939-967, October.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dividend policy; Disclosure; Dividend payout; Difference-in-difference; Logit regression;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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