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

Author

Listed:
  • 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)

  • Keith Jakob

    (College of Business, University of Montana, USA)

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.

Suggested Citation

  • Yoonsoo Nam & Scott J Niblock & Elisabeth Sinnewe & Keith Jakob, 2018. "Do corporate directors ‘heap’ dividends? Evidence on dividend rounding and information uncertainty in Australian firms," Australian Journal of Management, Australian School of Business, vol. 43(3), pages 421-438, August.
    • Handle: RePEc:sae:ausman:v:43:y:2018:i:3:p:421-438
    DOI: 10.1177/0312896218758838
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    References listed on IDEAS

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    Cited by:

    1. Castillo, Augusto & Rubio, German & Jakob, Keith, 2020. "Currency magnitude and cognitive biases: Evidence of dividend rounding in Latin America," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).

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    More about this item

    Keywords

    Behavioral; directors; dividends; heaping; management; rounding;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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