Influence of Transparency and Disclosures on the Dividend Distribution Decisions in the Firms: Do Profitability and Efficiency of Firms Matter?

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

1. In abstruct authors need to provide their research implication. 

2. In the introduction authors provided lots of infromation, but their main motivation to do this reseach is not clear to me. 

3. Their main research hypothesis is not clear to me. 

4. Authors should use more recent literatures. 

5. Authors could read the following papers- 

Hasan, F. (2021). Dividend changes as predictors of future profitability. The Journal of Prediction Markets. 15(1), 37-66.

Hasan, F., Kayani, U. N., and Choudhury, T. (2023). Behavioral Risk Preferences and Dividend Changes: Exploring the Linkages with Prospect Theory Through Empirical Analysis. Global Journal of Flexible Systems Management. 24(4), 517-535. 

6. Authors methodology section was well written. 

5. Authors need to rewrite their tables, because all the tables are so difficult to read. Authors could put their SE under the coefficient value, rather than next to it. 

6. Authors have to explain their findings more critically, rather than just simply tell me what they found, I can see that from the table. Also, authors have to explain their findingsd using relevant referesnces. 

7. In discussion section authors have to explain their finding with relevant references. 

8. In conclusion section authors have to include their research inmplications, research limitation and future research. 

Comments on the Quality of English Language

Need minor proofread. 

Author Response

1. Does the introduction provide sufficient background and include all relevant references? - Can be improved

Ans. Thank you very for your valuable suggestions to improve this manuscript. We have incorporated all your comments. The introduction is now update as suggested by the reviewer.

2. Are all the cited references relevant to the research? - Can be improved

Ans. Improved accordingly

3. Is the research design appropriate? - Can be improved

Ans. Improved accordingly

4. Are the methods adequately described? - Can be improved

Ans. Improved accordingly

5. Are the results clearly presented? - Can be improved

Ans. Improved accordingly

6. Are the results clearly presented? - Can be improved

Ans. Improved accordingly

7. In abstract authors need to provide their research implications. 

Ans. Thank you for suggesting this. We have now updated the abstract as suggested by the reviewer. 

8. In the introduction, the authors provided lots of information, but their main motivation to do this research is unclear to me. 

Ans. Introduction is now updated as suggested by the reviewer

9. Their main research hypothesis is not clear to me. 

Ans. We have now updated the literature review as suggested. The main research hypothesis is to determine the impact of TD on the dividend policy under the moderating effect of profitability and efficiency.

10. authors should use more recent literatures.

Ans. Thank you very much for suggesting this. We have now updated the literature review as suggested. 

11. Hasan, F., Kayani, U. N., and Choudhury, T. (2023). Behavioral Risk Preferences and Dividend Changes: Exploring the Linkages with Prospect Theory Through Empirical Analysis. Global Journal of Flexible Systems Management. 24(4), 517-535.

Ans. Thank you for suggesting this research for further enhancing the literature. 

12. Hasan, F., Kayani, U. N., and Choudhury, T. (2023). Behavioral Risk Preferences and Dividend Changes: Exploring the Linkages with Prospect Theory Through Empirical Analysis. Global Journal of Flexible Systems Management. 24(4), 517-535. 

Ans. Thank you for suggesting this research for further enhancing the literature. 

13. Author's methodology section was well written.

Ans. Thank you very much for the appreciation. 

14. Authors must rewrite their tables because they are so difficult to read. Authors could put their SE under the coefficient value, rather than next to it. 

Ans. We have updated the table accordingly. 

15. Authors have to explain their findings more critically, rather than just simply tell me what they found, I can see that from the table. Also, authors have to explain their findings using relevant references.

Ans. We have now updated the Results and Discussion section as suggested by the reviewer. 

16. In the discussion section authors have to explain their findings with relevant references. 

Ans. Updated accordingly. 

17.  In conclusion section authors have to include their research inmplications, research limitations and future research.

Ans. Updated accordingly

 

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

 

Authors investigate whether the impact of transparency and disclosure levels on dividends is moderated by technical efficiency and profitability, considering a panel data (78 BSE-listed enterprises) between 2016 and 2020. According to conclusions, the study contributes to current literature by providing better insights to managers, investors, regulators, and researchers on the efficacy of the corporate governance system by developing a transparency and disclosure index for an emerging market economy (i.e., India). The article is interesting and well written, with relevant results. I only have some comments to improve its robustness.

Considering the literature review section, I recommend to consider the role of institutional efficiency as a driver of firms’ dividend payout policy (e.g., Falavigna and Ippoliti, 2022). This can give an additional overview on the institutional environment, and how it might affect the decision of pay dividends to shareholders.

Considering methodology, I recommend to verify section 3.4 (Technical efficiency) and the number of input/outputs. This is a point deserving great attention because, as Wilson (2018) explains, when the number of inputs (p) and outputs (q) grows, two central issues emerge: (i) the efficiency of DMUs seems to increase; (ii) the number of DMUs lying on the frontier is higher. Scholars have suggested various rules of thumb to overcome these problems, and authors should apply one of these to verify the robustness of their model definition (e.g., Falavigna and Ippoliti, 2021, 2023).

Afterwards, I recommend authors to adopt a specific section to present limits of their investigation (e.g., sample size), and the transferability of the collected results to other realities (e.g., western countries?).  

Finally, considering the conclusion, I recommend to authors the adoption of two sub-sections with key messages to stakeholders, highlighting the policy implications (first) and the practical managerial implications (second). This approach could give a higher visibility to their article.

 

 

 

Citations:

Falavigna G., Ippoliti R., (2022). SMEs and dividend payout policy in case of poor legal environment. Journal of Small Business Management, forthcoming. DOI:10.1080/00472778.2022.2144634.

Wilson, P. W. (2018). Dimension reduction in nonparametric models of production. European Journal of Operational Research, 267(1), 349-367.

Falavigna G., Ippoliti R. (2023). Data Envelopment Analysis to investigate the Italian legal system and its reform. Journal of Public Affairs, forthcoming. DOI: 10.1002/pa.2877

 

Comments on the Quality of English Language

Appropriate.

Author Response

1. Does the introduction provide sufficient background and include all relevant references?

Ans. Thank you very much for your valuable suggestions to improve this manuscript. We have incorporated all the comments to improve this paper. Thank you very much for your valuable suggestions to improve this manuscript. We have incorporated all the comments to improve this paper.

2. Are all the cited references relevant to the research?

Ans. Updated accordingly

3. Are the results clearly presented? -Can be improved

Ans. Updated accordingly

4. Are the conclusions supported by the results? -Can be improved

Ans. Updated accordingly

5. Considering the literature review section, I recommend to consider the role of institutional efficiency as a driver of firms’ dividend payout policy (e.g., Falavigna and Ippoliti, 2022). This can give an additional overview on the institutional environment, and how it might affect the decision of pay dividends to shareholders.

Ans. Thank you very much for suggesting this. We have now updated the literature review  accordingly. 

6. Considering methodology, I recommend to verify section 3.4 (Technical efficiency) and the number of input/outputs. This is a point deserving great attention because, as Wilson (2018) explains, when the number of inputs (p) and outputs (q) grows, two central issues emerge: (i) the efficiency of DMUs seems to increase; (ii) the number of DMUs lying on the frontier is higher. Scholars have suggested various rules of thumb to overcome these problems, and authors should apply one of these to verify the robustness of their model definition (e.g., Falavigna and Ippoliti, 2021, 2023).

Ans. Thank you very much for suggesting this. We have now updated section 3.4 as suggested. 

7. Afterwards, I recommend authors to adopt a specific section to present limits of their investigation (e.g., sample size), and the transferability of the collected results to other realities (e.g., western countries?). 

Ans. Updated accordingly

8. Finally, considering the conclusion, I recommend to authors the adoption of two sub-sections with key messages to stakeholders, highlighting the policy implications (first) and the practical managerial implications (second). This approach could give a higher visibility to their article.

Ans. Updated accordingly

9. Citations:

Falavigna G., Ippoliti R., (2022). SMEs and dividend payout policy in case of poor legal environment. Journal of Small Business Management, forthcoming. DOI:10.1080/00472778.2022.2144634.

Wilson, P. W. (2018). Dimension reduction in nonparametric models of production. European Journal of Operational Research, 267(1), 349-367.

Falavigna G., Ippoliti R. (2023). Data Envelopment Analysis to investigate the Italian legal system and its reform. Journal of Public Affairs, forthcoming. DOI: 10.1002/pa.2877

Ans. Cited these papers as required. 

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

This interesting study examines the effect of the adoption of transparency and disclosure practices on dividend payouts among BSE 100 firms.

I have a few small suggestions for clarity:

1 - Section 3.2 only describes the empirical approach as a 'panel data model'. It becomes clearer that this is some form of GMM. This should be clarified in 3.2, along with key characteristics (system/difference, etc.) of the specification.

2 - The figures would benefit from the addition of confidence intervals so they are more easily read independently of the tables.

3 - I find the nonlinear result is particularly interesting, but this gets little discussion. Taken alongside the technical efficiency results, this seems to indicate an adjustment period followed by an effort to return to pre-TD dividend levels, with the adjustment potentially more easily overcome by higher TE firms. It would be nice to see some discussion of this in the conclusion section, framing this result in light of what we know from the broader literature.

4 - Perhaps a smaller point, but on page 5, there should be some description of what the Insolvency and Bankruptcy Code and The Company Act mean for TD. It's strongly implied that they matter, but exactly how is specialist knowledge that isn't shared. Did these laws lead to voluntary or required reporting standards? Did they introduce restrictions on dividends or expenditures? How would they have affected accounting and reporting practices?

5 - I think I'd drop the last paragraph about the study's limitations. Apart from the sentence about how a more detailed T&D index could be useful, it comes across as unnecessarily self-deprecating.

Comments on the Quality of English Language

There are a few small mechanical issues in some of the sections that I expect would be picked up in normal proofreading.

A couple of notes:

On line 56, CLSA is not spelled out in its first use. This would be helpful.

In Table 3, the description of Model 2 (Quadratic Model) is misspelled.

Author Response

1. Are the methods adequately described?

Ans. Thank you very much for your valuable suggestions to improve this manuscript. We have incorporated all the reviewer's comments and updated the manuscript accordingly.

2.  Are the results clearly presented?

Ans. Updated accordingly. 

3. Section 3.2 only describes the empirical approach as a 'panel data model'. It becomes clearer that this is some form of GMM. This should be clarified in 3.2, along with key characteristics (system, difference, etc.) of the specification.

Ans. Thank you very much for suggesting this. We have updated this section as suggested. 

4. The figures would benefit from the addition of confidence intervals so they are more easily read independently of the tables.

Ans. We have now updated the table. However, we have mentioned p-values in table for better understanding. 

5. I find the nonlinear result is particularly interesting, but this gets little discussion. Taken alongside the technical efficiency results, this seems to indicate an adjustment period followed by an effort to return to pre-TD dividend levels, with the adjustment potentially more easily overcome by higher TE firms. It would be nice to see some discussion of this in the conclusion section, framing this result in light of what we know from the broader literature.

Ans. We have updated the Results and Discussion sections, accordingly.

6. Perhaps a smaller point, but on page 5, there should be some description of what the Insolvency and Bankruptcy Code and The Company Act mean for TD. It's strongly implied that they matter, but exactly how is specialist knowledge that isn't shared. Did these laws lead to voluntary or required reporting standards? Did they introduce restrictions on dividends or expenditures? How would they have affected accounting and reporting practices?

Ans. Updated accordingly. 

7.   I think I'd drop the last paragraph about the study's limitations. Apart from the sentence about how a more detailed T&D index could be useful, it comes across as unnecessarily self-deprecating.

Ans. Updated accordingly. 

8. On line 56, CLSA is not spelled out in its first use. This would be helpful.

Ans. Updated accordingly

9. In Table 3, the description of Model 2 (Quadratic Model) is misspelled.

Ans. We are sorry for this. We have now improved it. 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

Accept in present form