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Financial Constraints and the Sustainability of Dividend Payout Policy

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  • Greta Falavigna

    (Research Institute on Sustainable Economic Growth (IRCrES), National Research Council of Italy (CNR), 10024 Moncalieri, Italy)

  • Roberto Ippoliti

    (Faculty of Business Administration and Economics, Bielefeld University, 33615 Bielefeld, Germany)

Abstract

This article investigates the relation between dividend payout policy and financial constraints, focusing on the Italian SMEs between 2015 and 2019 and adopting credit ratings as a measure of access to external financial resources. According to our findings, there is a positive relation between firm solvency and the payment of dividends, suggesting that, when companies’ financial constraints are higher, we can expect lower odds that they will pay out dividends. Nevertheless, there is also evidence that younger SMEs are interested in signaling their expected profitability to attract future investors and support access to the capital market.

Suggested Citation

  • Greta Falavigna & Roberto Ippoliti, 2021. "Financial Constraints and the Sustainability of Dividend Payout Policy," Sustainability, MDPI, vol. 13(11), pages 1-15, June.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:11:p:6334-:d:568053
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