Financing payouts
We find that 43% of firms that make payouts also raise capital during the same year, resulting in 31% of aggregate payouts being externally financed, primarily with debt. Most financed payouts cannot be explained by payout-smoothing in response to volatile earnings or investment—rather, they are the...
| Những tác giả chính: | , , |
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| Định dạng: | Journal article |
| Ngôn ngữ: | English |
| Được phát hành: |
Cambridge University Press
2024
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| Tóm tắt: | We find that 43% of firms that make payouts also raise capital during the same year, resulting in
31% of aggregate payouts being externally financed, primarily with debt. Most financed payouts
cannot be explained by payout-smoothing in response to volatile earnings or investment—rather,
they are the result of firms persistently setting payouts above free cash flow. In fact, 25% of
aggregate payouts could not have been paid without the firms simultaneously raising capital.
Profitable firms with moderate growth use debt-financed payouts to jointly manage their
leverage and cash, thus highlighting the close relationship between payout and capital structure
decisions. |
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