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Geopolitical risk and corporate payout policy

Samer Adra, Yang Gao, Jin Huang, Jiayi Yuan

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...

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Published in: International Review of Financial Analysis
ISSN: 1057-5219
Published: Elsevier BV 2023
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa62931
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first_indexed 2023-03-14T16:59:48Z
last_indexed 2023-03-28T03:21:07Z
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spelling v2 62931 2023-03-14 Geopolitical risk and corporate payout policy cadc0d0c1ad9c8c76270fed4d9b48a60 Jiayi Yuan Jiayi Yuan true false 2023-03-14 BAF 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. Journal Article International Review of Financial Analysis 87 102613 Elsevier BV 1057-5219 Geopolitical risk; Corporate payout policy; Share repurchase; Cash dividend 1 5 2023 2023-05-01 10.1016/j.irfa.2023.102613 http://dx.doi.org/10.1016/j.irfa.2023.102613 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University Another institution paid the OA fee 2023-06-23T14:55:44.6006770 2023-03-14T16:42:06.5422108 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Samer Adra 1 Yang Gao 2 Jin Huang 3 Jiayi Yuan 4 62931__26938__cc24fc6d14e24fa9adeb779ec3985d18.pdf 62931.VOR.pdf 2023-03-27T15:10:31.0398877 Output 767282 application/pdf Version of Record true This is an open access article under the CC BY-NC-ND license. true eng https://creativecommons.org/licenses/by-nc-nd/4.0/
title Geopolitical risk and corporate payout policy
spellingShingle Geopolitical risk and corporate payout policy
Jiayi Yuan
title_short Geopolitical risk and corporate payout policy
title_full Geopolitical risk and corporate payout policy
title_fullStr Geopolitical risk and corporate payout policy
title_full_unstemmed Geopolitical risk and corporate payout policy
title_sort Geopolitical risk and corporate payout policy
author_id_str_mv cadc0d0c1ad9c8c76270fed4d9b48a60
author_id_fullname_str_mv cadc0d0c1ad9c8c76270fed4d9b48a60_***_Jiayi Yuan
author Jiayi Yuan
author2 Samer Adra
Yang Gao
Jin Huang
Jiayi Yuan
format Journal article
container_title International Review of Financial Analysis
container_volume 87
container_start_page 102613
publishDate 2023
institution Swansea University
issn 1057-5219
doi_str_mv 10.1016/j.irfa.2023.102613
publisher Elsevier BV
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
url http://dx.doi.org/10.1016/j.irfa.2023.102613
document_store_str 1
active_str 0
description 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.
published_date 2023-05-01T14:55:39Z
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score 11.036334

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