Preliminary Insights on Firms’ Dividend Policy Financial Drivers, from a Business Resilience Capability Perspective

Valentin Burcă; Oana Bogdan; Ovidiu-Constantin Bunget; Alin-Constantin Dumitrescu

doi:10.5755/j01.ee.36.5.37818

Authors

Valentin Burcă "Aurel Vlaicu" University of Arad, Faculty of Economic Sciences, Romania; West University of Timisoara, Faculty of Economics and Business Administration, Romania
Oana Bogdan West University of Timisoara, Faculty of Economics and Business Administration, Romania
Ovidiu-Constantin Bunget West University of Timisoara, Faculty of Economics and Business Administration, Romania
Alin-Constantin Dumitrescu West University of Timisoara, Faculty of Economics and Business Administration, Romania

DOI:

https://doi.org/10.5755/j01.ee.36.5.37818

Keywords:

financial resilience, dividends per share, earnings per share, accruals, credit raiting, crisis

Abstract

There is a long debate about dividend policy, and indirectly on the level of dividends per share, without a consensus among researchers on the main drivers. The higher instability installed globally, on the ground of multiple consequent crises, has forced firms to pay more attention to the decision of distributing dividends to shareholders, as such a decision limits firms’ self-financing financial resources, with potential negative implications for sustainable growth, because of improper project-based investment financing. In a VUCA-BANI corporate environment, it is also mandatory to understand business resilience and how dividend policy could be affected, considering the concerns among investors when addressing the dynamics of dividend per share. With this paper, we come with preliminary insights on how the COVID-19 pandemic has affected firms’ dividend policy, but more importantly, on how this decision has affected business model resilience. We therefore assess the impact of several financial drivers of dividend distribution decision for the immediate period after this pandemic has ended, respectively earnings per share, credit risk score, stock market price volatility, or accruals ranking. The study uses a large dataset of data analytics provided through Refinitiv database. We analyse more than 1100 firms selected based on data availability, from developed European economies. Overall, the results suggest a marginal effect of the earnings per share, the variance of earnings per share, the credit risk score, and accruals level on the level of dividends per share. The study adds to the literature valuable information about financial drivers of dividend distribution decision, in the context of the actual high uncertainty in the business environment, because of the multiple overlapping crises. Nonetheless, the study provides some information on the synergy effects of the country- and industry-specific macroeconomic and institutional factors.

Author Biographies

Valentin Burcă, "Aurel Vlaicu" University of Arad, Faculty of Economic Sciences, Romania; West University of Timisoara, Faculty of Economics and Business Administration, Romania

Valentin Burcă is a senior researcher working in the Department of Accounting and Audit of the Faculty of Economics and Business Administration, West University of Timisoara, member of the Body of Expert and Licensed Accountants of Romania and member of Institute of Internal Auditors. He has degrees in economics, finance and mathematics, PhD in accounting. He has gathered a wide experience as well on business process management and corporate assurance services areas, acting in different positions of process manager and as global corporate senior internal auditor in various big multinational corporations. He has over 15 years of professional experience and more than 8 years of academic teaching. His research is focused on corporate risk management and governance processes, internal and external corporate assurance services, fraud investigation and data analytics, corporate reporting, business process management, or economics of corporate sustainability business models transformation, leading to publication of various papers in international academic and professional journals. During last years he has been involved in numerous research projects, with an increasing focus on bridging the gap between accounting research, accounting education and professional practice.
Oana Bogdan, West University of Timisoara, Faculty of Economics and Business Administration, Romania

Oana Bogdan is a lecturer working in the Accounting and Audit Department of the Faculty of Economics and Business Administration, West University of Timisoara. He has a degree in economics, PhD in accounting. She has gathered a long and wide professional accounting experience and expertise, working on a local specialized accounting consulting company. Her vast area of professional practice, and inclined research interests on the area of financial reporting, sustainability reporting and governance process, has led to multiple research articles published in international journals. A more recent focus of her research is oriented towards corporate governance mechanisms and relation with green economy strategic orientation of business models transformation. Currently Oana has more than 10 years of experience in accounting teaching and professional practice. Additionally, she holds various courses on financial accounting to government professional agencies for certification purposes.
Ovidiu-Constantin Bunget, West University of Timisoara, Faculty of Economics and Business Administration, Romania

Ovidiu-Constantin Bunget is a full professor in financial accounting, financial audit, financial control and accounting standard-setting courses, in the Accounting and Auditing department of the Faculty of Economics and Business Administration, West University of Timisoara. He has a degree in economics and law, PhD in accounting, leading a local well-known consulting company which provides services in the financial accounting, statutory audits and taxation areas. His professional background starts with the period of 1995 to 2002 when he acted as a consultant of PriceWaterhouseCoopers in areas such as statutory audits, due diligence, reorganization and bankruptcy. Currently, he is Managing Partner at A.B.A. Audit Timisoara. He is the head of the Accounting and Auditing department of the Faculty of Economivs and Business Administration, West University of Timisoara. He is a member of various prestigious professional organizations as well, such as member of the Romanian Association of Accounting, expert pair at Agence pour l'Evaluation de la Qualite de l'Enseignement Superieur en Communaute Francaise (Bruxelles), president of CECCAR (Body of Expert and Licensed Accountants of Romania) Timisoara, or member of CAFR (Chamber of Financial Auditors of Romania). His research has focused on topics of financial auditing, sustainability reporting and emerging technologies in accounting, including in quality of supervisor of PhD students.
Alin-Constantin Dumitrescu, West University of Timisoara, Faculty of Economics and Business Administration, Romania

Alin-Constantin Dumitrescu is an associate professor of the financial accounting, financial audit and history of corporate financial frauds courses, in the Accounting and Auditing department of the Faculty of Economics and Business Administration, West University of Timisoara. He has a degree in accounting, PhD in accounting, working for more than 15 years in a local well-known consulting company which provides services in the financial accounting, statutory audits and taxation areas. Currently, he is an Audit Partner at A.B.A. Audit Timisoara. He is a certified financial auditor (CAFR Member) and Vice-president of CAFR (Chamber of Financial Auditors of Romania), member of the Body of Expert and Licensed Accountants of Romania (CECCAR). He has succesfully combined the accounting research and professional practice experience and expertise with the academic teaching for more than 20 years. He as also an authorized teacher of the CECCAR and CAFR professional development programs for more than 10 years. His research interests are various, but mainly oriented towards publishing articles in international journals in areas of financial audit, internal audit and sustainability reporting.