An international study of the response of corporate payout policy

Purpose: 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. Design/methodology/approach: 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. Findings: 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. Research limitations/implications: 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. Originality/value: 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.