Abstract Book of the 9th International Academic Conference on Management and Economics
Year: 2025
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How Are Dividend Policies of Firms Related to Their Quality of Disclosures?
Prof. Dr. Hemant Kumar Manuj
ABSTRACT:
Quality of communication in annual reports is intrinsically related to the disclosure standard followed by a firm. The quality of communication of dividend policy by a firm to its shareholders tells us about how much the firm and the shareholders care for the disclosure standards. We evaluate if the disclosures by firms to their shareholders have any signalling effect on their dividend yields. We specifically study two aspects of the disclosures related to dividend pay-out policy of Indian large cap firms, based in a large emerging market country, i.e., India. Firstly, we measure the quality of communication by the sampled firms to its shareholders, in relation to the regulatorily mandated level. This would indicate whether firms care more than the regulatorily required level of the disclosure standards with respect to their dividend policies. Secondly, we also evaluate whether the quality of communication has any relationship with the dividend yields of firms. Our findings indicate that firms comply only with the minimum level of regulatory disclosures required for their dividend policies. We also find that their dividend yields are not related to the level of their disclosures on dividend policies. Our study is unique in exploring the specific relationship between disclosure standards and dividend yields for firms in a large emerging market. It has information value for the regulators, firms as well as investors.
Keywords: dividend policy, investor communication, corporate governance, annual reports