External finance and dividend policy: a twist by financial constraints

He, Zhong, Chen, Xiaoyan, Huang, Wei, Pan, Rulu and Shi, Jing (2016) External finance and dividend policy: a twist by financial constraints. Accounting and Finance, 56 4: 935-959. doi:10.1111/acfi.12245

Author He, Zhong
Chen, Xiaoyan
Huang, Wei
Pan, Rulu
Shi, Jing
Title External finance and dividend policy: a twist by financial constraints
Journal name Accounting and Finance   Check publisher's open access policy
ISSN 1467-629X
Publication date 2016-12-01
Sub-type Article (original research)
DOI 10.1111/acfi.12245
Open Access Status Not yet assessed
Volume 56
Issue 4
Start page 935
End page 959
Total pages 25
Place of publication Richmond, VIC, Australia
Publisher Wiley-Blackwell Publishing Asia
Language eng
Subject 1402 Accounting
2003 Finance
2001 Economics, Econometrics and Finance (miscellaneous)
Abstract This study assesses distorting effect of financial constraints on the inverse relationship between internal and external finance by examining impact of an exogenous financing shock (i.e. a regulation released in China in 2008) on dividend policies in a quasi-natural experimental setting. Our result shows that in the absence of the regulation, the inverse relationship holds. However, the relation is twisted by the 2008 regulation. Compared with unconstrained firms, financially constrained firms are more willing to pay dividends and are more restrained to reduce cash dividends after the regulation, despite the fact that their external financing capacities are further constrained.
Keyword Dividend policy
External finance
Financial constraint
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
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UQ Business School Publications
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