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The purpose of this article is to empirically explore the sensitivity of payouts to cash flows and the other financing decisions, such as debt and investment, of firms.

Using panel regressions based on COMPUSTAT data for 7,544 public firms during the period 1973–2013, we estimate the sensitivity of total payouts. Specifically, following the theory presented in Lambrecht and Myers (2012), we test the interdependent financing decisions of the firm. First, we compute total payout as the sum of cash dividends and net stock repurchases; second, we examine the sensitivity of total payouts to changes in the firm’s net income, debt and investment. Furthermore, we present several tests to demonstrate the robustness of our results.

We suggest evidence in support of the theory in Lambrecht and Myers (2012) showing that there is a negative relationship between total payouts and investment. Furthermore, we find that total payouts are positively associated with net income and debt of the firm.

Previous research has shown how cash flows affect different financing decisions, but it is not clear how total payouts are sensitive to other financing decisions. The focus of this paper is the response of total payouts to investment policy, debt financing policy and changes in cash flows.

The purpose of the paper is to examine the relationship between litigation risk and payout policy.

The authors employ various regression techniques including probit, logit and tobit regression methodologies to study the relationship between litigation risk (contemporaneous measures, litigation dummy) and payout policy (dividend payout likelihood and dividend yield). The authors also conduct several robustness tests.

The authors find that firms involved in a lawsuit have a lower propensity to distribute dividends to shareholders. In particular, the authors document a negative relationship between litigation risk and payout policy as measured by dividend payout likelihood and dividend yield. The results are robust to a series of robustness tests including using alternate regression specifications, alternate measures of litigation and payout policy, a propensity-score matched sample and using an instrumental variable.

The paper identifies another determinant of payout policy and documents another avenue whereby legal institutions affect corporate payout policy. The link between litigation risk and payout policy is of interest to the business community, financial economists, management and the investing public.

The purpose of this paper is to study the payout policy for public firms in different countries. The authors are interested to understand the similarities and differences in the behavior of firms across different countries.

The authors use firm-level data collected from Compustat Global for public firms across the world. The sample consists of more than 23,000 firms for the period 1990–2015 in 94 countries. The authors estimate the corporate payout in an empirical model that incorporates other corporate financing decisions, such as investment and debt policies.

The findings support recent corporate governance theory, which asserts that payout policy is influenced by investment and debt policies, and cannot be determined independently. Furthermore, the authors find that geographic/cultural/institutional variation influence the response of payout policy to other corporate financing decisions. Additional tests are presented to demonstrate the robustness of the main findings.

The interpretation of the results for certain regions could be limited due to data availability. The authors believe the authors have a good coverage especially for countries in Asia, relative to the other regions.

To the best of our knowledge, this study is the first one to look at payout policy and its relationship with investment and debt policy in such a large scale of firms across the world with coverage of 94 countries and 16 years. The authors document differences in public firms’ attitudes toward payout policy according to geographic/cultural/institutional reasons.

The purpose of this paper is to investigate payout smoothing in two emerging markets – China and Taiwan. The authors conduct a comparative study of two emerging market economies that have common cultural and historical characteristics but have experienced different government systems and different approach to the market-based system.

The authors collect firm-level data from Standard and Poor's Compustat Global database, which covers 5,298 public firms in China and Taiwan during the period 1996–2015, and use a variance decomposition methodology to estimate the smoothness of corporate payout in a common empirical framework that includes net income, and debt and investment policies.

Overall, the empirical findings support recently proposed theories of joint determination of corporate payout behavior with debt and investment policies. The authors find that debt and investment policies absorb the majority of shocks to net income, and that debt policy is the main shock absorber. Furthermore, the authors show that firms in China follow a similar strategy with their counterparts in United States and smooth their payout. In contrast to firms in China and US, the payout of the Taiwanese firms is relatively highly sensitive to net income shocks.

To the best of authors’ knowledge, this study is the first to use a joint model to empirically investigate the extent to which debt and investment policies are used to keep corporate payout smooth in emerging markets.

This study aims to investigate the effects of peers on corporate payout policies in one of the largest emerging markets – India. It also examines the motives for mimicking payout decisions.

The sample is composed of 3,024 non-financial and non-government firms listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for the period 1995 to 2020. To encounter the endogeneity problem, the instrumental variable technique based on peer firms' idiosyncratic risk is used to estimate the effects of peers on firms' payout policy. To define peer reference groups, the authors use the basic industry classification of the firms.

The results indicate a significant positive impact of peers on firms' dividend policies in India. A firm with all dividend-paying peers is more likely to declare dividends than the one with no dividend-paying peers. Further, peer effects are found to be more pronounced amongst larger and older firms, thus supporting the rivalry theory of mimicking.

To the best of the authors' knowledge, the present study is the first of its kind that attempts to understand peer effects on payout decisions in an emerging market India, that offers a unique institutional setting. Moreover, the authors extend the existing literature by investigating the peer effects on a firm's payout policies considering various firm-level characteristics, such as growth opportunity, cash holding, financial constraint and profitability, which previous studies have not taken into consideration. These results provide additional insights into the heterogeneity and motives behind peer effects.

This paper aims to examine the extent to which corporate board attributes influence dividend payout policies.

A total number of 2,842 firm’s year-observations of Malaysian non-financial firms representing from various industries. The firms were scrutinized over a period of 14 financial years covering from 2005 to 2018. The data was in a panel form given the cross-sectional and time-series nature. The fixed effect is used as the main technique for analysis. The OLS and random effects techniques are used for robustness for this study.

The results revealed that the proportion of board independence, board tenure, board size and CEO duality have a positive and statistically mixed effect on dividend pay-out. However, the corporate board diversity and board member age had a negative association with dividend payouts. Overall, the results suggest that firms with well-organized corporate board attribute affect positively on dividend pay-out policy.

This research contributes to a nuanced understanding of internal governance mechanisms by presenting evidence of the substitution hypothesis in an emerging economy in which firms operate within a unique regulatory framework and board composition.

The dividend payout behaviour of firms is a well‐studied subject in finance. In recent times, the influence of macro economic factors and understanding their implications far corporate financial decisions has assumed significant importance. The objective of this paper is to study the dividend payout behaviour of firms in India under monetary policy restrictions. Monetary policy restrictions are expected to affect the availability and cost of external fund relative to internal funds. The hypothesis is that during monetary policy restrictions the dividend payout policy changes and payouts reduce.

The Lintner framework is extended to examine the impact of these restrictions on the dividend payout. Balanced panel data of 571 firms for years are used, from 1989 to 1997 together with, the GMM estimator, which is the most suitable methodology in a dynamic setting.

The results show that Indian firms have lower target ratios and higher adjustment factors. The finding suggests that the restricted monetary policies have a significant influence on the dividend payout behaviour of Indian firms; they cause about a 5‐6 per cent reduction in the payout ratios.

The findings of this paper suggest that macro‐economic policies do have an impact on corporate financing decisions. The future research should examine the impact of various other macro‐economic policies and its components on the corporate financing decisions of firms.

The significance of the macro economic policy variables suggests that monetary policy restrictions do have an impact on the cost of raising funds, and the information asymmetry between lenders and borrowers increases, which forces companies to reduce their dividend payout.

To one's knowledge this is the first study providing evidence of the restricted monetary policy constraining the dividend payout policies of firms in India.

The purpose of this paper is to examine the influence of board structure on dividend policy of Australian corporate firms. It also considers the traditional explanations of corporate dividend choice, such as agency cost theory, signalling hypothesis, the life cycle hypothesis along with tax-based explanations of dividend policy.

The final sample consists of 413 non-financial firms that are part of the All Ordinaries Index. The causal analysis was undertaken in three stages. In the first stage, the authors analyse the likelihood of paying dividends. And classify all firms as either dividend payers or non-payers. The authors then model this binary variable as a function of different sets of variables. In the second stage, the authors analyse the factors determining the magnitude of dividend payout by those firms that have paid a dividend. In contrast, stage three employs all firms – those which did not pay any dividend and those firms which paid a dividend.

For the study period 2004-2009, this study finds that board independence has a significant positive influence on the dividend payout of Australian firms. This finding is consistent with the “outcome” model of La Porta et al. (2000). This study also finds that size has a significant positive influence on the dividend payout of Australian firms thus providing support for the agency cost view of dividend policy. Similarly, this study also finds support for the signalling hypothesis and the life cycle theory given the significant positive influence of profitability and the significant negative influence of current losses and growth opportunities on the dividend policy of Australian firms.

The findings of the study are robust with to alternative measures of variables employed and are not influenced by the global financial crisis. However, this study did not consider the possible endogenous and multiple relationships between dividends, debt, profitability, cash holdings and governance structures given the limited study period considered.

This study finds that board independence has a significant positive influence on the dividend behaviour of Australian firms. This suggests that dividends and independent directors play complementary governance roles. While dividends provide the monitoring and disciplinary roles, independent directors act as catalysts for enhancing effective board functioning. These findings have implications for corporate governance policies and the payout policies.

Though the governance role of dividends has long been recognized in the literature (Easterbrook, 1984; Jensen, 1986), very few studies analyse the influence of board characteristics on the decision to pay dividends in Australia. Given the distinct Australian setting where the tax imputation system allows companies to pay franked dividends to domestic investors, this study provides evidence on the interaction of corporate and dividend policies. This study finds that dividend polices are influenced by percentage franking of dividends. This study also finds that board independence has a significant positive influence on the dividend policy of Australian firms.

This paper examines whether long-term foreign investors may force firms to use a costly dividend to mitigate inefficient managerial behavior. The authors also hypothesize that the relation between foreign investment horizons and payout policy depends upon the extent of the corporate governance. The authors find that firms held by long-term foreign investors make dividend more often in the subsequent years. The authors also find that foreign investors with long-term investments do not cause firms to pay dividends when firms have strong corporate governance. It suggests that long-term foreign investors serve as a substitute for strong corporate governance with respect to controlling agency conflicts.

The purpose of this paper is to examine the impact of product market competition on dividend payout and share repurchases in Australia in which a full dividend imputation system has been in place since 1987.

Panel data estimation with industry and year-fixed effects is employed to examine the role of industry competition on dividend payout and share repurchases. The paper uses a sample of ASX200 non-financial firms, including 4,272 observations over the period 1992–2015. To address the endogeneity problem, the authors utilize the event of Australia–United States Free Trade Agreement (AUSFTA), which became effective on 01 January 2005, and perform a difference-in-difference analysis.

The authors find that firms operating in competitive markets are likely to pay more dividends and repurchase more shares to reduce agency costs. The positive relation between industry competition and dividends is stronger among firms where the CEO and the Chairman of the Board are the same person and among firms with higher market-to-book ratio and higher standard deviation of stock returns. The study results are robust when the authors account for the impact of franking credit on dividend payment. In the difference-in-difference analysis, the authors find strong evidence of a casual relation that product competition drives changes in dividend policy.

The findings are consistent with the notion that intense product market competition can mitigate agency conflicts between managers and shareholders and with the information signalling explanation of market competition. As such, regulators may want to introduce policies that encourage more market competition (e.g. market deregulation) to enhance market efficiency.

This study incorporates product market competition in explaining the firm payout policy.