Cahit Adaoglu

Instability in the Dividend Policy of the Istanbul Stock Exchange (ISE) Corporations: Evidence from an Emerging Market

Dividend policy behaviour of corporations operating in emerging markets is significantly different from the widely accepted dividend policy behaviour of corporations operating in developed markets. This study provides evidence from the Istanbul Stock Exchange (ISE), an emerging European stock market, and analyses empirically whether the ISE corporations follow stable cash dividend policies in a regulatory environment that imposed mandatory dividend policies. Unlike the empirical results supporting the stable dividend policy behaviour of corporations operating in developed markets, the empirical results show that the ISE corporations follow unstable cash dividend policies and the main factor that determines the amount of cash dividends is the earnings of the corporation in that year.

Why Do Companies Pay Stock Dividends? The Case of Bonus Distributions in an Inflationary Environment

We assess the market valuation of an unusual form of stock dividends, referred to as bonus distributions, which are carried out by transferring the accumulated equity reserves, mainly the inflation revaluation equity reserves, to paid‐in capital leaving the total equity unchanged. In the absence of cash substitution and transaction cost effects, we find positive excess returns on the announcement dates, particularly for the financially weak firms, such as the non‐cash‐dividend‐paying firms. We relate our results to the ‘paid‐in capital hypothesis’ under which firms opt for bonus distributions to mitigate the impact of inflation on their eroding paid‐in capital, to reduce their leverage defined as debt‐to‐paid‐in‐capital ratio, and to increase their credibility and borrowing capacity in a market of limited access to external equity financing. Although our results are also consistent with the retained earnings and signaling hypotheses, we find no support for the attention‐getting, and a weak support for the liquidity enhancement hypotheses observed in other markets.

Oil production cost, financial development, and economic growth in Russia

ABSTRACT The study investigates the causal relationship between fossil energy sources, the production cost of oil and financial development on economic growth in Russia. The results show that Russian companies’ production cost of oil and oil prices cause economic growth and the one-way causality is negative. We also find that there is one-way positive causality from natural gas price, financial development, and education to economic growth. The negative oil price effect supports the resource curse hypothesis, whereas the positive natural gas price effect does not. Russian policies should focus on lowering companies’ production cost of oil, improving financial development and investing in education.

Cash management in the travel and leisure sector: evidence from the United Kingdom

ABSTRACT This study investigates the determinants of cash holdings for companies operating in the travel and leisure (TL) sector of the United Kingdom (UK) between 2005 and 2016. The study finds that growth opportunities, cash flow, and cash flow volatility affect cash holdings positively, while size, leverage, liquidity, asset intangibility and dividend payments affect negatively. Companies operating in the airlines sub-sector hold more cash, while companies in the hotels and restaurants and bars sub-sectors hold less cash than the reference sub-sector of travel and tourism. Except for the free cash flow model, the trade-off and pecking order models of cash holdings are empirically supported for the TL sector.