机构:
Hong Kong Polytech Univ, Dept Accounting & Finance, Kowloon, Hong Kong, Peoples R ChinaGriffith Univ, Dept Accounting Finance & Econ, Nathan, Qld, Australia
Purpose 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. Design/methodology/approach 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. Findings 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. Practical implications 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. Originality/value This study incorporates product market competition in explaining the firm payout policy.
机构:
Univ Western Ontario, DAN Dept Management & Org Studies, London, ON, CanadaUniv Western Ontario, DAN Dept Management & Org Studies, London, ON, Canada
机构:
Korea Inst Publ Finance KIPF, 336 Sicheong Daero, Sejong Si 30147, South KoreaKorea Inst Publ Finance KIPF, 336 Sicheong Daero, Sejong Si 30147, South Korea
机构:
Univ Massachusetts, Coll Management, 100 William T Morrissey Blvd, Boston, MA 02125 USAUniv Toronto, Rotman Sch Management, 105 St George St, Toronto, ON M5S 3E6, Canada
Wang, Mengying
Zhou, Jun
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机构:
Dalhousie Univ, Rowe Sch Business, 6100 Univ Ave, Halifax, NS B3H 4R2, CanadaUniv Toronto, Rotman Sch Management, 105 St George St, Toronto, ON M5S 3E6, Canada