Dividend payout decisions under uncertainty : the ownership influence in the early days of the COVID-19 pandemic in Finland
Lindén, Andreas; Lehner, Othmar M.; Losbichler, Heimo; Martikainen, Minna (2022-07-19)
Emerald
19.07.2022
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe202301235217
https://urn.fi/URN:NBN:fi-fe202301235217
Kuvaus
vertaisarvioitu
© Andreas Linden, Othmar M. Lehner, Heimo Losbichler and Minna Martikainen. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
© Andreas Linden, Othmar M. Lehner, Heimo Losbichler and Minna Martikainen. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
Tiivistelmä
Purpose
This paper examines whether ownership type has a moderating influence on dividend payouts during the COVID-19 pandemic crisis with respect to changes in profits. Future uncertainties because of the pandemic will result in a perceived need for liquidity within the company, but retaining cash may be risky for shareholders who could look for less risky alternatives. The dividend payout strategy is thus even more closely related to the overall type concentration and strategy of the owners during the crisis.
Design/methodology/approach
The effects are explored and tested on early data from 2019 to 2020 of Finnish companies using ANCOVA while controlling for profitability and sector variables.
Findings
A significant effect on dividend payout during the COVID crisis was found when the companies are dominantly held by individual owners validating early suggestions on such an influence. Therefore, this study contributes further to the academic debates on the influence of ownership concentration in times of crises. This study lists certain sectors which experience diminished profits during such a crisis which pinpoints sector separation in future discussions.
Research limitations/implications
This study explores early data from a specific context in the Nordic countries. However, it does so out of purpose as explained in the paper.
Practical implications
Ownership type and concentration matters when it comes to dividend payout decisions under uncertainty with regard to changes in profit. Investors need to accept these behavioural insights into their decisions.
Originality/value
This study examines the signalling effect of dividends by analysing how actual or anticipated change in profitability due to a crisis is reflected by owners and leads to dividend payout decisions under uncertainty.
This paper examines whether ownership type has a moderating influence on dividend payouts during the COVID-19 pandemic crisis with respect to changes in profits. Future uncertainties because of the pandemic will result in a perceived need for liquidity within the company, but retaining cash may be risky for shareholders who could look for less risky alternatives. The dividend payout strategy is thus even more closely related to the overall type concentration and strategy of the owners during the crisis.
Design/methodology/approach
The effects are explored and tested on early data from 2019 to 2020 of Finnish companies using ANCOVA while controlling for profitability and sector variables.
Findings
A significant effect on dividend payout during the COVID crisis was found when the companies are dominantly held by individual owners validating early suggestions on such an influence. Therefore, this study contributes further to the academic debates on the influence of ownership concentration in times of crises. This study lists certain sectors which experience diminished profits during such a crisis which pinpoints sector separation in future discussions.
Research limitations/implications
This study explores early data from a specific context in the Nordic countries. However, it does so out of purpose as explained in the paper.
Practical implications
Ownership type and concentration matters when it comes to dividend payout decisions under uncertainty with regard to changes in profit. Investors need to accept these behavioural insights into their decisions.
Originality/value
This study examines the signalling effect of dividends by analysing how actual or anticipated change in profitability due to a crisis is reflected by owners and leads to dividend payout decisions under uncertainty.
Kokoelmat
- Artikkelit [3011]