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Corporate hedging and dividend policy: An empirical study of Korean firms

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  • Choi, Young Mok
  • Park, Kunsu
  • Kim, Woo Sung

Abstract

This study examines whether corporate hedging is associated with dividend payouts. Using a sample of firms listed on the Korea Stock Exchange (KSE) between 2002 and 2017, we find that firms with a higher use of property-liability insurance pay more dividends. This finding is robust to endogeneity issues and alternative proxies for dividend payouts. Overall, our empirical evidence sheds light on the effect of hedging with property-liability insurance on a firm's dividend decisions.

Suggested Citation

  • Choi, Young Mok & Park, Kunsu & Kim, Woo Sung, 2020. "Corporate hedging and dividend policy: An empirical study of Korean firms," Finance Research Letters, Elsevier, vol. 32(C).
    • Handle: RePEc:eee:finlet:v:32:y:2020:i:c:s1544612318306378
    DOI: 10.1016/j.frl.2018.12.034
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    More about this item

    Keywords

    Corporate hedging; Property-liability insurance; Cash flow uncertainty; Dividend payout;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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