Do corporate directors ‘heap’ dividends? Evidence on dividend rounding and information uncertainty in Australian firms

Yoonsoo Nam; Scott J. Niblock; Elisabeth Sinnewe; Keith Jakob

doi:10.1177/0312896218758838

Do corporate directors ‘heap’ dividends? Evidence on dividend rounding and information uncertainty in Australian firms

Yoonsoo Nam
, Scott J. Niblock
, Elisabeth Sinnewe
, Keith Jakob

Accounting and Finance

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

In this study, we examine the extent of dividend heaping in Australian firms between 1976 and 2015. Our findings show that 27.39% of dividends greater than or equal to 2.5-cents are heaped in 2.5-cent intervals, while 70.90% of dividends less than 2.5-cents are heaped in 0.25-cent intervals. We find that the heaping phenomenon decreases over time and average dividend size increases. We also show that when establishing the likelihood of dividend heaping, stock return volatility and firm size are consistent with the information uncertainty hypothesis. Dividend heaping also appears to be influenced by firm-level characteristics that are inconsistent with the hypothesis. For instance, the likelihood of heaping increases with dividend size and firm age.

Original language	English
Pages (from-to)	421-438
Number of pages	18
Journal	Australian Journal of Management
Volume	43
Issue number	3
DOIs	https://doi.org/10.1177/0312896218758838
State	Published - Aug 1 2018

Funding

We would like to thank the Carson College of Business, Washington State University, School of Business and Tourism, Southern Cross University, School of Accountancy, Queensland University of Technology, and College of Business and the Donald and Carol Jean Byrnes Professorship, University of Montana for their research assistance. The author(s) received no financial support for the research, authorship, and/or publication of this article.

Funders
Southern Cross University
Queensland University of Technology

Keywords

Behavioral
G02
G35
directors
dividends
heaping
management
rounding

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10.1177/0312896218758838

Cite this

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abstract = "In this study, we examine the extent of dividend heaping in Australian firms between 1976 and 2015. Our findings show that 27.39\% of dividends greater than or equal to 2.5-cents are heaped in 2.5-cent intervals, while 70.90\% of dividends less than 2.5-cents are heaped in 0.25-cent intervals. We find that the heaping phenomenon decreases over time and average dividend size increases. We also show that when establishing the likelihood of dividend heaping, stock return volatility and firm size are consistent with the information uncertainty hypothesis. Dividend heaping also appears to be influenced by firm-level characteristics that are inconsistent with the hypothesis. For instance, the likelihood of heaping increases with dividend size and firm age.",

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Do corporate directors ‘heap’ dividends? Evidence on dividend rounding and information uncertainty in Australian firms

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Keywords

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