The Effect of Product Market Competition and Financing Constraints on Dividend Payout

10 Pages Posted: 21 Apr 2020

See all articles by Hussein Abdoh

Hussein Abdoh

United Arab Emirates University (UAEU) - Department of Economics and Finance

Aktham Issa Maghyereh

United Arab Emirates University (UAEU)

Date Written: March 12, 2020

Abstract

We examine how product market competition and financing constraints influence firm payout policy. Using Compustat firms for the period 1996 to 2017, we show that competition decreases firms’ propensity to make payouts via dividends more if the firm is financially constrained. These results are consistent with the hypothesis that in the presence of financing constraints, creating internally generated funds (through the reduction of dividends) is more important for firms positioned in competitive markets.

Keywords: Product market, Financial constraint, Payout policy

JEL Classification: G32, G35, D4

Suggested Citation

Abdoh, Hussein and Maghyereh, Aktham Issa, The Effect of Product Market Competition and Financing Constraints on Dividend Payout (March 12, 2020). Available at SSRN: https://ssrn.com/abstract=3553076 or http://dx.doi.org/10.2139/ssrn.3553076

Hussein Abdoh (Contact Author)

United Arab Emirates University (UAEU) - Department of Economics and Finance ( email )

United Arab Emirates

Aktham Issa Maghyereh

United Arab Emirates University (UAEU) ( email )

P.O. Box 15551
Al-Ain
United Arab Emirates

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