Document Type : Research Article

Authors

1 Department of Accounting, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran

2 Department of Accounting, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

3 Department of Financial Management, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

Abstract

The substitution hypothesis postulates that various corpo- rate governance forms and dividend disbursements serve as alternatives. Given that transparent information disclosure mitigates agency issues by lessening information asymmetry and fortifying corporate governance, this study aims to explore the influence of Material Information Dis- closure which includes Groups A, B and Other Cases—characterized by their promptitude and significance—on dividends. Examining the period from 2018 to 2021 and encompassing a sample of 173 listed firms from the Tehran Stock Exchange, the findings affirm the substitution hypothesis. Moreover, Board independence is identified as a moderator in the rela- tionship between Material Information Disclosures and dividend. Fur- thermore, the findings indicate that during the Covid-19 period, Group A and Other Cases were more potent factors for dividend reduction than Group B disclosure.

Keywords

[1] B. Al Shabibi, G. Ramesh, An empirical study on the determinants of dividend policy in
the UK, International Research Journal of Finance and Economics, (2011).
[2] C. Bell , M. Lewis, The Economic implications of epidemics old and new, (2005).
[3] P. Brockman , E. Unlu, Earned/contributed capital, dividend policy, and disclosure quality:
An international study, Journal of Banking and Finance, 35(2011), 1610-1625.
[4] G. Chau, S.J., Gray, Family ownership, board independence and voluntary disclosure:
Evidence from Hong Kong, Journal of International Accounting, Auditing and Taxation,
19(2010), 93-109.
[5] Y.L. Cheung , P. Jiang , W. Tan, A transparency disclosure index measuring disclosures:
Chinese listed companies, Journal of Accounting and Public Policy, 29 (2010), 259-280.
[6] J. Consler , G.M. Lepak , S.F. Havranek, Earnings per share versus cash flow per share
as predictor of dividends per share, Managerial Finance, 37(2011), 482-488.
[7] H. Cho , R. Kim, Asymmetric effects of voluntary disclosure on stock liquidity: evidence
from 8K filings, (November, 2019).
[8] P.M. Dechow , S.A. Richardson, R.G. Sloan, The persistence and pricing of the cash
component of earnings, Journal of accounting research, 46(2008), 537-566.
[9] D. Dhaliwal , O.Z. Li, A. Tsang, Y.G. Yang, Corporate social responsibility disclosure
and the cost of equity capital: The roles of stakeholder orientation and financial transparency,
Journal of accounting and public policy, (2014).
[10] D.W. Diamond , R.E. Verrecchia, Disclosure, liquidity, and the cost of capital, The journal
of Finance, 46 (1991), 1325-1359.
[11] R. Donnelly , M. Mulcahy, Board structure, ownership, and voluntary disclosure in Ireland, Corporate Governance: An International Review, 16 (2008), 416-429.
[12] N.O.D. Ellili, Impact of environmental, social and governance disclosure on dividend policy:
What is the role of corporate governance? Evidence from an emerging market, Corporate
Social Responsibility and Environmental Management, (2022).
[13] C. Gleason , Z. Ling, R. Zhao, Selective disclosure and the role of Form 8-K in the post-Reg
FD era, J Bus Fin Acc, (2019), 132.
[14] I. Iskandar , S. Tan, T.A. Lubis , A. Machpudin, Firm value model from the perspective
of firm profitability and dividend-paying behavior with dividend payout as a mediator, Jurnal
Perspektif Pembiayaan dan Pembangunan Daerah, 10 (2022), 199-212.
[15] P. Jiraporn , Y. Ning, Dividend policy, shareholder rights, and corporate governance,
(2006).
[16] E. Kadiolu , E.A. Yilmaz, Is the Free Cash Flow Hypothesis Valid in Turkey?, Borsa
istanbul Review, (2017).
[17] S.F. Khatib , A. Nour, The impact of corporate governance on firm performance during
the COVID-19 pandemic: Evidence from Malaysia, Journal of Asian Finance, Economics
and Business, 8 (2021), 0943-0952.
[18] K. Krieger , N. Mauck , S.W. Pruitt, The impact of the COVID-19 pandemic on dividends, Finance Research Letters, 42 (2021).
[19] R. La Porta , F. LopezdeSilanes , A. Shleifer , R.W. Vishny, Agency problems and
dividend policies around the world, The journal of finance, 55 (2000), 1-33.
[20] D. Lin , H.C. Kuo, L.H Wang, Can Disclosure Quality Explain Dividend Payouts?, International Business Research, 7(2014).
[21] D. Lombardo , M. Pagano, Law and equity markets: A simple model, (1999).
[22] M.M. Luo , M. Plumlee, Voluntary disclosure and dividend policy, (2008).
[23] M. Mazur , M. Dang, T.T.A. Vo, Dividend policy and the COVID-19 crisis, (2021).
[24] X. Ni , H. Zhang, Mandatory corporate social responsibility disclosure and dividend payouts:
evidence from a quasinatural experiment, Accounting and Finance, (2019).
[25] A. Saeed , F. Zamir, How does CSR disclosure affect dividend payments in emerging markets?, Emerging Markets Review, 46(2021).
[26] F. Samadi , H. Eslami Mofid Abadi, The Effect of Volatility Temporal Changes on the Predictability and Return of Optimal Portfolio Using the DMA Model, Journal of Mathematics
and Modeling in Finance, 1(2021), 1-14.
[27] S.P. Sharif , M. Ming Lai, The effects of corporate disclosure practices on firm performance,
risk and dividend policy, International Journal of Disclosure and Governance, (2015).
[28] R. Sultana , R. Ghosh , K.K. Sen, Impact of COVID-19 pandemic on financial reporting
and disclosure practices: empirical evidence from Bangladesh, Asian Journal of Economics
and Banking, 6 (2022), 122-139.
[29] R.E. Verrecchia, Discretionary disclosure, Journal of accounting and economics, 5 (1983),
179-194.
[30] X. Zhao, Does Information Intensity Matter for Stock Returns? Evidence from Form 8-K
Filings, Management Science, (2016).