Corporate payout smoothing: A variance decomposition approach

Hoang, Edward C.; Hoxha, Indrit

doi:10.1016/j.jempfin.2015.10.011

Cited by 31 publications

(33 citation statements)

References 23 publications

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“…This implies that the firm's capital structure absorbs shocks to net income in such a way that it enables dividend smoothing. This finding is consistent with Hoang and Hoxha (2016) and Daniel et al (2010). Overall, our conclusion from this analysis is twofold.…”

Section: Shocks To Incomesupporting

confidence: 93%

“…For example, Leary and Michaely (2011) find that dividend smoothing is most prevalent among firms that face no constraints and are most susceptible to agency conflicts. Also, Hoang and Hoxha (2016) show that the firm's capital structure absorbs approximately 57 percent of the variation in net income. Daniel et al (2010) show that firms use capital structure policies to absorb financial shocks while only making adjustments to dividend payments.…”

Section: Introductionmentioning

confidence: 99%

“…Third, the nature of the shocks determines the degree of smoothing, an attribute not predicted by Lambrecht and Myers (2012). Moreover, previous empirical work has treated the absorption of shocks by the firm's capital structure as homogeneous for both negative and positive changes in the firm's income (Daniel et al 2010;Hoang and Hoxha, 2016).…”

Section: Introductionmentioning

confidence: 99%

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What is the relation between financial flexibility and dividend smoothing?

Fliers

2019

Journal of International Money and Finance

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This paper investigates the relation between financial flexibility and dividend smoothing policies.We use two proxies for financial flexibility; we measure levels of unused debt capacity and capital structure adjustment speeds. We find a nonlinear relation between unused debt capacity and dividend smoothing. For firms with high levels of unused debt capacity, this relation is positive.However, we find a negative effect for firms with low levels of unused debt capacity. Additionally, we show a positive relation between capital structure adjustment speeds and dividend smoothing.We find that firms absorb shocks to net income by changing their capital structure, and this change enables dividend smoothing. The effects we document are stronger for positive changes to a firm's net income.

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Section: Shocks To Incomesupporting

confidence: 93%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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What is the relation between financial flexibility and dividend smoothing?

Fliers

2019

Journal of International Money and Finance

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“…Recent research, however, points to a positive relationship between dividend payout and financial performance (Kajola et al, 2015). Hoang and Hoxha (2016) argue that dividend smoothing is sensitive to financing and investing decisions of the firm. Apparently, the stream of researchers reporting positive relationship seems dominant.…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

Mediating role of dividend policy among its determinants and organizational financial performance

Hunjra

2018

Cogent Economics & Finance

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The mediating mechanism of dividend policy remained untapped between financial performance, uncertainty, corporate social responsibility (CSR) and stakeholders' interest. However, this study contributes to the body of knowledge and discovers the mediating role of dividend policy between financial performance, uncertainty, CSR and stakeholders' interest. Data is collected through a questionnaire from CFO's/financial managers of Pakistani corporate sector. Structural Equation Modeling (SEM) is used to analyze the results through AMOS. Uncertainty, CSR, and stakeholders' interests have a significant impact on financial performance. It is found partial mediation between uncertainty and financial performance whereas dividend policy fully mediates the CSR, stakeholders' interest and financial performance.

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“…Then their contributions are, respectively, calculated to further compute the proportion of their contributions in the total contribution to reflect the relative importance of each variable (Sørensen and Yosha 1998;Hoang and Hoxha 2015). Table 7 presents results of variance decomposition.…”

Section: Variance Decomposition Of Ic and Rdmentioning

confidence: 99%