Dividends and Economic Policy Uncertainty: International Evidence

85 Pages Posted: 17 Dec 2018 Last revised: 29 Oct 2020

See all articles by Najah Attig

Najah Attig

Saint Mary's University - Department of Finance & Management Science

Sadok El Ghoul

University of Alberta - Campus Saint-Jean

Omrane Guedhami

University of South Carolina - Moore School of Business

Xiaolan Zheng

University of Nottingham, Ningbo China -Nottingham University Business School China

Date Written: March 2, 2020

Abstract

We provide the first international evidence on the impact of economic policy uncertainty (EPU) on dividend policy. Using data from 19 countries, we find that a high level of EPU is positively associated with dividend payout. This evidence is robust to using alternative dividend payout measures, to controlling for other sources of uncertainty, and to addressing endogeneity. We further find that the effect of EPU on dividend policy is moderated by firms’ free cash flows and governance quality, and by the quality of country-level indicators of shareholder protection, disclosure, enforcement, and creditor protection. Collectively, our novel evidence suggests that dividends help mitigate agency problems during high-EPU periods.

Keywords: Dividends; Economic policy uncertainty; Corporate governance; International

Suggested Citation

Attig, Najah and El Ghoul, Sadok and Guedhami, Omrane and Zheng, Xiaolan, Dividends and Economic Policy Uncertainty: International Evidence (March 2, 2020). Available at SSRN: https://ssrn.com/abstract=3295228 or http://dx.doi.org/10.2139/ssrn.3295228

Najah Attig

Saint Mary's University - Department of Finance & Management Science ( email )

Halifax, Nova Scotia B3H 3C3
Canada
902-491-8679 (Phone)

Sadok El Ghoul (Contact Author)

University of Alberta - Campus Saint-Jean ( email )

Edmonton, Alberta T6G 2R3
Canada
780-465-8725 (Phone)
780-465-8760 (Fax)

Omrane Guedhami

University of South Carolina - Moore School of Business ( email )

Columbia, SC
United States

Xiaolan Zheng

University of Nottingham, Ningbo China -Nottingham University Business School China ( email )

199 Taikang East Road
AB 469
ningbo, Zhejiang 315100
China

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