Asymmetric Cost Behavior and Dividend Policy

• 成果类型: Article
• 署名作者: He, Jie; Tian, Xuan; Yang, Huan; Zuo, Luo
• 署名单位: University System of Georgia; University of Georgia; Tsinghua University; University of Massachusetts System; University of Massachusetts Amherst; Cornell University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12328
• 发表日期: 2020
• 页码: 989-1021
• 关键词: regression discontinuity designs; information-content; organized-labor; payout policy; CASH-FLOW; earnings; FIRMS; identification; unionization; REPURCHASES

摘要

Costs are sticky on average, that is, they fall less for sales decreases than they rise for equivalent sales increases. We examine the effect of this asymmetric cost behavior on a firm's dividend policy. Given investors' aversion to dividend cuts, we predict that firms with higher resource adjustment costs and stickier costs pay lower dividends than their peers because they are less able to sustain any higher level of dividend payouts in the future. We find evidence consistent with this prediction. Further, using a regression discontinuity design that exploits variation in labor adjustment costs generated by close-call union elections, we provide evidence suggesting that the negative relation between cost stickiness and dividend payouts is driven by resource adjustment costs. Our paper sheds new light on the determinants of dividend policy and demonstrates the role of cost behavior in corporate decisions.