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Media type:
E-Article
Title:
Cost Structure and Payout Policy
Contributor:
Kulchania, Manoj
Published:
Wiley, 2016
Published in:
Financial Management, 45 (2016) 4, Seite 981-1009
Language:
English
DOI:
10.1111/fima.12133
ISSN:
0046-3892;
1755-053X
Origination:
Footnote:
Description:
I investigate the effects of firms’ proportion of fixed and variable costs on their payout policy and find that firms with higher fixed costs have significantly higher volatility in their future cash flows and more variable future operating incomes. These firms pay a lower fraction of their operating income in dividends and share repurchases. Finally, these firms return higher fractions of their payouts via share repurchases because this method offers greater flexibility. The results are robust to several alternate specifications and firm‐level controls, and show that firms’ cost structures play a significant role in payout policy choices.