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Corporate dividend smoothing: The role of cross-listing

Author

Listed:
  • Balli, Faruk
  • Agyemang, Abraham
  • Gregory-Allen, Russell
  • Ozer Balli, Hatice

Abstract

This paper examines how, and to what extent, cross-listing impacts corporate dividend smoothing. We report significantly increased dividend smoothing, with idiosyncratic sectoral responses, after cross-listing. Furthermore, we show that sectoral competition and local market development explain the extent of dividend smoothing after cross-listing. To study the dynamics in dividend smoothing channels after cross-listing, we adopt a variance decomposition approach. We find substantial variation in the use of debt and investment channels to absorb net income shocks, keeping dividends smooth after cross-listing. Our findings suggest that, with increased access to a larger pool of capital in the U.S., cross-listed firms are motivated to keep dividends stable through debt and investment decisions after cross-listing.

Suggested Citation

  • Balli, Faruk & Agyemang, Abraham & Gregory-Allen, Russell & Ozer Balli, Hatice, 2022. "Corporate dividend smoothing: The role of cross-listing," Journal of Corporate Finance, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:corfin:v:72:y:2022:i:c:s092911992100273x
    DOI: 10.1016/j.jcorpfin.2021.102151
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    3. Aoki, Yasuharu, 2023. "The effect of dividend smoothing on bond spreads: Evidence from Japan," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 621-637.

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    More about this item

    Keywords

    Dividend smoothing; Lintner's partial adjustment model; Cross-listing; Dividend payout; Speed of adjustment;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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