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Geopolitical risk and corporate payout policy
International Review of Financial Analysis, Volume: 87, Start page: 102613
Swansea University Author: Jiayi Yuan
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DOI (Published version): 10.1016/j.irfa.2023.102613
Abstract
In this study, we examine the effects of geopolitical risk on corporate payout policy. Exploiting a news-based index of geopolitical risk, we find that firms adopt a more conservative payout policy by reducing share repurchases in response to greater geopolitical risk, whereas the effects of geopoli...
| Published in: | International Review of Financial Analysis |
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| ISSN: | 1057-5219 |
| Published: |
Elsevier BV
2023
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa62931 |
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| Abstract: |
In this study, we examine the effects of geopolitical risk on corporate payout policy. Exploiting a news-based index of geopolitical risk, we find that firms adopt a more conservative payout policy by reducing share repurchases in response to greater geopolitical risk, whereas the effects of geopolitical risk on cash dividends are insignificant. Further analysis suggests that cash flow uncertainty and financial distress risk are two potential channels through which geopolitical risk affects corporate payout policy. We also show that the effects of geopolitical risk on share repurchase are more pronounced for firms with greater exposure to product market competition and those facing higher threats of financial distress. Overall, our study emphasizes the implications of geopolitical risk for corporate payout choice. |
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| Keywords: |
Geopolitical risk; Corporate payout policy; Share repurchase; Cash dividend |
| College: |
Faculty of Humanities and Social Sciences |
| Start Page: |
102613 |