Corporate cash holdings and dividend payments: evidence from simultaneous analysis
AbstractThis study explores the simultaneous relationship between corporate cash holdings and dividend policy using a large sample of around 400 non-financial firms for the period from 1991 to 2008. The results show that cash holdings are affected by dividends, leverage, growth, size, risk, profitability, and working capital ratio. Dividend policy is affected by cash, leverage, growth, size, risk, and profit. When controlling for simultaneity, dividend payments do not appear to significantly affect cash holdings, nor do cash holdings affect dividend policy. The empirical analysis suggests that simultaneity is crucial in analyzing corporate cash holdings and dividend policy. Copyright (C) 2011 John Wiley & Sons, Ltd.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.
Volume (Year): 32 (2011)
Issue (Month): 4 (June)
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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976
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- Al-Najjar, Basil, 2013. "The financial determinants of corporate cash holdings: Evidence from some emerging markets," International Business Review, Elsevier, Elsevier, vol. 22(1), pages 77-88.
- Yacine Belghitar & James Khan, 2013. "Governance mechanisms, investment opportunity set and SMEs cash holdings," Small Business Economics, Springer, Springer, vol. 40(1), pages 59-72, January.
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