H. Kent Baker, Sujata Kapoor and Imad Jabbouri
This study aims to examine dividend policy from the perspective of institutional investors in India. It focuses on the level of importance these investors attach to the dividend…
Abstract
Purpose
This study aims to examine dividend policy from the perspective of institutional investors in India. It focuses on the level of importance these investors attach to the dividend policy of their investee firms, the level of influence they exercise in shaping such firms’ dividend policies and their reactions to changes in dividends. This study also reports how institutional investors view various explanations for paying dividends.
Design/methodology/approach
A mail survey provides a profile of respondents and their firms, as well as responses to 29 closed-ended questions involving various explanations for paying dividends and 22 closed-ended questions on various dividend issues.
Findings
The evidence shows that Indian institutional investors attach substantial importance to dividend policy and prefer high dividend payments. Their reactions to dividend changes are asymmetric. Taxes are a major driver for why they seek dividends, whereas liquidity needs to play little role in shaping their preferences. The two most commonly used methods of active monitoring are selling shares and communicating concerns to investee companies.
Research limitations/implications
The number of responses limits the ability to test for statistically significant differences between the various competing hypotheses.
Practical implications
The findings support multiple explanations for paying cash dividends and provide new evidence supporting the positive relation between inflation and dividend payments.
Originality/value
This study provides the first survey evidence on the views of institutional investors on dividend policy in India.
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This paper describes how financial professionals' behavioral biases influence their financial forecast and decision-making process. Most of the earlier studies are focused on…
Abstract
Purpose
This paper describes how financial professionals' behavioral biases influence their financial forecast and decision-making process. Most of the earlier studies are focused on well-developed financial markets, and little is researched about financial professionals, such as institutional investors, portfolio managers, investment advisors, financial analysts, etc., in emerging markets.
Design/methodology/approach
An expert-validated questionnaire measure four prominent behavioral biases and Indian financial professionals' rational decision-making process. The final sample consists of 274 valid responses using the purposive sampling technique. IBM SPSS and AMOS structural equation modeling (SEM) software are used to build measurement and structural models, multivariate analysis including regression, factor analysis, etc.
Findings
The results provide empirical insights into the relationship between behavioral biases and the decision-making process. The results suggest that the structural path model closely fits the sample data. The presence of behavioral biases indicates that financial professionals' forecasting and decision-making is not always rational but bounded rational or irrational due to these factors. Furthermore, these biases (except overconfidence bias) have a markedly significant and positive relationship with irrational decision-making.
Research limitations/implications
It is critical to eradicate these psychological errors, but awareness and attentiveness toward behavioral biases may help financial professionals to make informed decisions. Investors can improve their portfolio decisions and investments by recognizing their judgment errors and focusing on specific investment strategies to mitigate the impact of these biases. It is necessary to incorporate behavioral insights while developing training techniques for financial professionals. Rules of thumb, visual tools, financial coaching and implementing social-cultural elements in training programs enable financial professionals to develop simple, engaging, appealing and customized approaches for their clients.
Originality/value
This novel study is the first of this kind of research that examines the relationship between financial professionals' behavioral biases and rational decision-making process. This study significantly and remarkably provides insights into irrationality in financial professionals' decision-making.
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H. Kent Baker, Sujata Kapoor and Tanu Khare
Financial professionals are increasingly important in the Indian financial system. Our study examines the association between the Big Five personality traits and Indian financial…
Abstract
Purpose
Financial professionals are increasingly important in the Indian financial system. Our study examines the association between the Big Five personality traits and Indian financial professionals' behavioral biases when making investment decisions.
Design/methodology/approach
After testing our questionnaire's reliability and validity, we used it to obtain the sample responses. We used multiple regression analysis and other statistical tools to identify the relationships between the Big Five personality traits and behavioral biases.
Findings
Our findings reveal a high level of extraversion and conscientiousness, a moderate level of agreeableness and openness and a low neuroticism level among financial professionals. The results show a significant association between neuroticism, extraversion, openness and all behavioral biases except anchoring bias. The neuroticism trait has a statistically significant relationship with all behavioral biases examined, whereas agreeableness and conscientiousness traits lack a significant association with behavioral biases. The openness trait is associated with many emotional biases and cognitive heuristics, while the extraversion trait has a significantly positive relationship with availability bias.
Research limitations/implications
Future researchers could analyze primary (survey) and secondary investor data from brokerage houses. Using a larger sample could provide more generalizable findings. Researchers could also consider other aspects of investment decision-making using various asset classes. Understanding financial professionals' personality traits and behavioral biases could help them develop strategies to suit client needs.
Originality/value
This study provides the first comprehensive examination of the association between personality traits and behavioral biases of Indian financial professionals.
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Pooja Tripathi and Sujata Kapoor
Consumers by and large today look for economic growth and benefits without compromising on socio-environmental well-being. Having said that, it is imperative to note that…
Abstract
Consumers by and large today look for economic growth and benefits without compromising on socio-environmental well-being. Having said that, it is imperative to note that consumers' consciousness may not essentially lead to sustainable purchases. This chapter aims to examine the role of both sustainable purchase intention and post-purchase dissonance in the relationship between consumers' sustainability consciousness and consumers' evangelism. With the increased role of social media pervading our lives, trusted sources' recommendations play a significant role in co-creating products. Thus, research on consumers' evangelism (especially sustainability-conscious consumers) would help marketers develop successful strategies. This study expands to the extant literature on sustainability-conscious consumers vis-a-vis consumer evangelism. We collected responses from 227 respondents to examine hypotheses, by means of structural equation modelling (SEM). The study indicates sustainable purchase intention does mediate the relationship between sustainability-conscious consumers and consumer evangelism. On the other hand, we also note that post-purchase dissonance is not a significant moderating construct between sustainability-conscious consumers and consumer evangelism.
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H. Kent Baker and Sujata Kapoor
The purpose of this paper is to investigate the opinions of managers of Indian firms on stock splits and bonus shares (stock dividends) and relate them to explanations for stock…
Abstract
Purpose
The purpose of this paper is to investigate the opinions of managers of Indian firms on stock splits and bonus shares (stock dividends) and relate them to explanations for stock distributions identified in the prior literature.
Design/methodology/approach
The authors use descriptive statistics from a mail survey to the company secretaries of 500 firms listed on the National Stock Exchange of India to elicit their responses about statements involving stock splits and bonus shares.
Findings
The survey evidence shows that among the competing motives for stock splits, the liquidity hypothesis receives the highest level of support followed by the attention-getting variant of the signaling hypothesis, signaling, and the preferred trading range hypotheses. Regarding bonus shares, respondents express strong support for the retained earnings, liquidity, and signaling hypotheses but lesser support for the cash substitution and preferred trading range hypotheses.
Research limitations/implications
The survey evidence provides new insights into the stated motivations for stock distributions, especially bonus shares, among Indian firms but the ability to generalize the results is tempered by the relatively small number of respondents. This limits the ability to test for statistically significant differences between the various competing hypotheses. Hence, the results are suggestive rather than definitive.
Practical implications
The survey evidence suggests that no single explanation dominates all others for issuing stock splits or bonus shares in India. Thus, managers have multiple reasons for engaging in stock distributions.
Originality/value
Few studies use survey methodology to examine Indian dividend policy. Given the dearth of survey evidence on stock distributions among Indian firms, this study not only updates the limited evidence on stock splits but also provides the first survey evidence about managerial views on bonus shares.
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Jaya Mamta Prosad, Sujata Kapoor and Jhumur Sengupta
The purpose of this paper is to examine the presence the behavioral biases in Indian investors specifically, overconfidence, excessive optimism (pessimism), herd behavior and the…
Abstract
Purpose
The purpose of this paper is to examine the presence the behavioral biases in Indian investors specifically, overconfidence, excessive optimism (pessimism), herd behavior and the disposition effect. It further investigates the role of demographics and investor sophistication in influencing the biases. Finally, it reveals which bias is most prevalent in the Indian context.
Design/methodology/approach
For this purpose, a survey has been conducted on the investors of the Delhi/NCR area. The data have been collected with the help of a structured questionnaire that is analyzed with the help of relevant statistical tools.
Findings
The survey evidence shows that behavioral biases are dependent on investors’ demographics and their trading sophistication with highest influencing factors being age, profession and trading frequency. Each bias corresponds to a specific set of investor characteristics and overconfidence comes out to be the most important bias in the Indian context.
Research limitations/implications
The potential limitations of the present survey can be ascribed to socially desirable responses and their difference with actual market behavior. Further, due to time and resource constraint, the data set is limited to investors of only Delhi/NCR.
Practical implications
This study is most relevant for financial advisors, as it facilitates them in gaining a better understanding of their clients’ psychology. It can aid them in developing behaviorally modified portfolio, which best suits their clients’ predisposition.
Originality/value
The paper gives a unique insight on the investors’ profile corresponding to each bias under consideration. It not only updates the evidence on behavioral biases but also highlights which bias is the most influential in the Indian context.
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Jaya Mamta Prosad, Sujata Kapoor and Jhumur Sengupta
– The purpose of this paper is to capture the presence and impact of optimism in the Indian equity market.
Abstract
Purpose
The purpose of this paper is to capture the presence and impact of optimism in the Indian equity market.
Design/methodology/approach
The data set comprises the daily values of the Nifty 50 index, index options and Treasury-bill index for a period of five years (2006-2011). The focus of this paper is two pronged. It first investigates the presence of optimism (pessimism) using the pricing kernel technique suggested by Barone-Adesi et al. (2012). Second, it tries to analyze the relationship of this bias with stock market indicators like risk premium, market return and volatility using time series regression.
Findings
The findings indicate that the Indian equity market has been predominantly pessimistic from the period 2006 to 2011. The interaction of this bias with market indicators also unveils some interesting insights. The study shows that high past volatility can lead to pessimism in the Indian equity market and vice versa. It further explores that when the investors are rational, their risk and return relationship is positive while it tends to be negative when they are irrational. The impact of investors’ irrationalities on asset valuation has also been accounted by Brown and Cliff (2005).
Research limitations/implications
The findings of the paper have significant implications for fund managers and asset management companies. It is recommended that they should try to identify behavioral biases in their clients before designing their portfolios.
Originality/value
This study is one of the very few attempts to capture the presence and impact optimism (pessimism) in the Indian equity market.
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H. Kent Baker and Sujata Kapoor
The purpose of this paper is to survey managers of dividend-paying firms listed on the National Stock Exchange (NSE) in India to learn their views about the factors influencing…
Abstract
Purpose
The purpose of this paper is to survey managers of dividend-paying firms listed on the National Stock Exchange (NSE) in India to learn their views about the factors influencing dividend policy, dividend issues, and explanations for paying cash dividends and repurchasing shares. The authors compare the results to other dividend surveys based on firms in Indonesia, Canada, and the USA.
Design/methodology/approach
The authors use questionnaire to gather primary data from a sample of 500 firms listed on the NSE.
Findings
The most important determinants of dividends involve earnings (the stability of earnings as well as the level of current and expected future earnings) and the pattern of past dividends. Comparing the overall rankings of the 21 factors by respondents from Indian firms to those of Indonesian, Canadian, and US firms reveals statistically significant correlations. Respondents also perceive that dividend policy affects firm value. Respondents also view maintaining an uninterrupted record of dividends as important. The most highly supported explanations for paying cash dividends concern signaling, the firm life cycle, and catering. Although none of the theories of repurchasing shares is dominant, respondents provide little support for the agency explanation.
Research limitations/implications
Although the tests suggest that the sample does not suffer from non-response bias, the findings should be viewed as suggestive rather than definitive because of the relatively low response rate.
Originality/value
The paper presents new evidence about dividend policy of Indian firms. To the knowledge, this is the most comprehensive survey of Indian firms to date that captures managerial perceptions on both cash dividends and share repurchases.
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Sujata Mukherjee and Santana Pathak
Among the various global options for self-employment, venturing into the micro-enterprise sector has been recognized as an important way for employment generation and poverty…
Abstract
Among the various global options for self-employment, venturing into the micro-enterprise sector has been recognized as an important way for employment generation and poverty alleviation in many developing/emerging economies. In this context, women-owned businesses at the grassroots play a vital role in developing countries like India far beyond contributing to job creation and economic growth. The informal sector is a sizeable and expanding feature of the contemporary global economy.
However, the informal economy operates at the cusp of the institutional framework, which makes them susceptible to many risks like lack of formal financing options, legal aid or increasing margin through access to formal markets. Non-Profit Development Agencies (NPDAs) have emerged as a viable and essential middle ground support in promoting women entrepreneurship in their capacity to contribute beyond governmental institutions.
The study adopted an inductive qualitative option through a case study design to explore the approaches adopted by NPDAs in promoting micro-entrepreneurship among women at the base of the pyramid (BoP) in the urban informal sector in India. The findings suggest that the NPDAs created an impact through the services, which translated into monetary earnings for the entrepreneurs. They could make financial contributions to their families, which boosted their self-confidence and overall personality. The findings also indicate positive changes like increased self-confidence, self-dependence, and inner strength as reported by the entrepreneurs.
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Swati Bhauso Patil and Sujata Jena
This study aims to create a systematic knowledge base on importance and utilization patterns of underrated pseudo-cereals prevalent in the northeastern hilly (NEH) region of…
Abstract
Purpose
This study aims to create a systematic knowledge base on importance and utilization patterns of underrated pseudo-cereals prevalent in the northeastern hilly (NEH) region of India, namely, buckwheat, Job’s tears, chenopod and amaranth, enabling their diversified use to develop innovative food products from them. The information presented in the paper would facilitate scientists, trainers and young entrepreneurs in developing many novel food products from these underrated pseudo-cereals.
Design/methodology/approach
Major scientific information has been collected from Scopus, Web of Science and Google Scholar. Several keywords such as underrated crop, pseudo-cereals, buckwheat, chenopod, Job’s tears, amaranth, value addition and utilization were used to find the data. Relevant information was collected by using about 60 recent research and review articles.
Findings
The main findings of this comprehensive study include compiled record of utilization of underrated pseudo-cereals found in the NEH region of India and their scope to innovate smart food products.
Originality/value
The paper presents a comprehensive record of nutritional benefits and utilization status of the underrated pseudo-cereals available in the NEH region of India. This knowledge base would help both the researchers and other professional working in the processing of these crops.