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Title: Links between divided policy and financial accounting, corporate finance, business decisions and investor protection : the role of economic and legal presence of mandatory dividend payment in Greece
Author: Sikalidis, Alexandros K.
ISNI:       0000 0004 2722 512X
Awarding Body: Lancaster University
Current Institution: Lancaster University
Date of Award: 2011
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This thesis consists of three self-contained studies regarding the dividend policy of Greek firms. The first study examines the dividend policy of Greek firms (non-financial firms - all constituents of the Athens Stock Exchange) by exploring its determining factors while relating them to the corporate structure and the state's financial institutional framework. Its main contribution is to provide evidence on the relation between corporate structure and dividend policy in an insider financial system where business ownership is concentrated in the hands of few shareholders, who also control the management. In Greece the above relation is detectable due to a unique legal requirement that. mandates a minimum dividend requirement based on earnings and share capital which can be circumvented only if shareholders who control sufficient voting power decide to do so. We show that the ownership type does not significantly affect the decision to waive the minimum payment requirement while the level of insider corporate ownership increases the likelihood of a dividend payment. On the other hand, the pursuit of growth opportunities and high leverage decrease the probability of a firm paying dividends and leverage alone decreases the probability of a firm to pay above the minimum dividend requirement. The second study investigates the signalling content of the dividend policy of Greek firms and the market reaction to dividend announcements. We examine both the signalling content of dividend changes as well as the signalling content of a waiver of the minimum dividend requirement. To test our hypotheses we use univariate, multivariate and event analyses. The study provides evidence supporting the free cash flow hypothesis while signalling hypothesis is not supported. In particular, dividend decreases or waivers of the minimum dividend requirement result in increased investments in the dividend change year and they contribute to higher . future profitability in the long term. The market considers that a waiver when a dividend is not paid contributes to a future increase in firm value. The third study examines the impact of specific fair value adjustments as promoted by the International Financial Reporting Standards (IFRS) on the divided policy of Greek firms from 2006-2008, We consider specific fair value adjustments which are included in the accounting income and arc identified by the Hellenic Commission of Auditing and Accounting Regulation (HCAAR) as non-distributable. We find a positive (negative) relationship between dividend payouts and income deriving from fair value adjustments on investment property (financial securities). Both types of income are persistent. We consider managerial opportunism to be a possible explanation for the negative relationship managerial opportunism (Goncharov and Van Triest (2010). Moreover, we find that fair value adjustments on investment property do not influence the choice of firms to pay dividends while there is a positive relationship between the fair value adjustments on financial securities and the decision of firms to pay dividends.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available