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

Yoonsoo Nam, Scott J Niblock, Elisabeth Sinnewe and Keith Jakob
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Yoonsoo Nam: Carson College of Business, Washington State University, USA
Scott J Niblock: School of Business and Tourism, Southern Cross University, Australia
Elisabeth Sinnewe: CTF, Service Research Center, Karlstad University, Sweden

Australian Journal of Management, 2018, vol. 43, issue 3, 421-438

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.

Keywords: Behavioral; directors; dividends; heaping; management; rounding (search for similar items in EconPapers)
JEL-codes: G02 G35 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:43:y:2018:i:3:p:421-438

DOI: 10.1177/0312896218758838

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