Robert J. Boldin

Bank dividend policy as a signal of bank quality

Abstract This article examines whether the dividend policy of bank holding companies is used as a signal of their quality. The study found evidence to support the dividend signaling argument—that is, that there is a positive relationship between bank dividends per share and bank quality rating. Additionally, an inverse relationship between the dividend payout ratio and bank quality was found. Therefore, both aspects of a bank holding companys dividend policy yields information about the quality of a financial institution.

Credit union industry structure: an examination of potential risks

Abstract The Credit Union Industry has undergone significant changes over the past decade. With more than 11,500 credit unions now serving 74 million members, it continues to attract shareholders/depositors because of its generally lower cost services and higher returns on savings. The Credit Union Membership Access Act of August 1998 should help membership continue to grow. At the same time, however, shareholders/depositors should be aware of the unique structure of the credit union industry. This paper examines the inherent risk as a result of the interrelationships among its components.

GCC equity market indices integration

Integration linkages between the five financial equity market indices located in the Gulf Cooperation Council (GCC) countries are empirically analysed. Using methodologies that account for idiosyncratic factors in the data, evidence of linkages between the GCC countries are found. The findings have implications for hedging or diversification strategies, particularly in the long-run. For example, the presence of cointegration between the GCC countries provides opportunities for investor cross-hedging, especially if markets differ in liquidity.

Are ADRs Different from US Stocks? An Analysis of Idiosyncratic Risks

Determinants of ADRs idiosyncratic risk are examined from the perspective of undiversified investors. Since ADRs enjoy a unique status, vis-a-vis US companies, we study whether determinants of their risk, derived from a two-stage regression model, are different from the one for U.S. firms. For the time period from 1999 through mid 2005, we found that, with the exception of the smallest US stocks in the sample, ADRs idiosyncratic risks are analogous to the ones observed for US firms. Also, ADRs sensitivity to fundamental variables that represent their inner financial structure is similar to US firms.

Dividend policy and earnings: a study of short- and long-term causality

This research examines whether earnings per share (EPS) and dividends per share (DPS) exhibit a short and long causality. The data employed in this study consist of quarterly EPS and DPS for 28 of the DJIA companies obtained from Bloomberg over a recent 10-year period. The companies under investigation all have EPS and DPS data available over the period studied. Dividends are generally paid out of earnings. The amount and timing of the dividend paid is a function of the respective company’s dividend policy. Therefore, the EPSt can be expressed in terms of the DPSt as follows: EPSt = αDPSt where α is a nonnegative constant. The equation suggests that there is a linear relationship between the EPSt and the DPSt. The results of this study indicate that bi-directional causality exists for some of the companies.

Determinants of risk: electric utilities pre- and post-deregulation era

This article explains how the Energy Policy Act of 1992 had impacted electric utilities in the United States. Three time periods were used reflecting data pre- and post-deregulation to better assess the effects that could have arisen from the Act. The cross-sectional data consists of 34 electric utilities with three dependent variables and five independent variables. Dependent variables include beta, total risk and idiosyncratic risk. Independent variables include SD of operating margin, return on total assets, asset turnover, financial leverage and liquidity ratio. Descriptive statistics indicate more improved electric utilities, vis-à-vis asset basis, in the years between 2009 and 2010. Furthermore, regression analysis indicates that out of all three dependent variables, idiosyncratic risk is the most important type of risk following the Energy Policy Act of 1992.