Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China

Liu Lin; Wang Jinfeng; Cao Rui

doi:doi:10.11648/j.jfa.20221001.15

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Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China

Liu Lin, Wang Jinfeng, Cao Rui

Published in Journal of Finance and Accounting (Volume 10, Issue 1)

Received: 27 December 2021 Accepted: 19 January 2022 Published: 28 January 2022

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Abstract

The dividend policy has long been of interest among researchers that study financial management and corporate finance. Previous literatures mainly analyzed based on the agency theory, free cash flow theory, major shareholder benefit transfer channel or others, the impact of cost stickiness has not been considered in the framework. Using the data of listed companies in China from 2007 to 2017, this paper examines the effect of cost stickiness on cash dividend policy based on managers’ self-interest. The result shows that firms with stickier cost pay lower cash dividends than their peers. Corporate governance will impact the relation between cost stickiness and cash dividend payouts: when corporate governance is worse, the impact of cost stickiness on cash dividend payouts is great as managers of firms with more cash holdings are willing to keep cash for self-use rather than pay dividends. Further, this paper provides evidence that cost stickiness affects cash dividends by worsening corporate governance. This paper not only contributes to accounting literature on cost stickiness, but also sheds new light on the determinants of cash dividends policy.

Published in	Journal of Finance and Accounting (Volume 10, Issue 1)
DOI	10.11648/j.jfa.20221001.15
Page(s)	44-57
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Corporate Governance, Cash Dividend Policy, Cost Stickiness, Cash Holdings

References

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APA Style

Liu Lin, Wang Jinfeng, Cao Rui. (2022). Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China. Journal of Finance and Accounting, 10(1), 44-57. https://doi.org/10.11648/j.jfa.20221001.15

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ACS Style

Liu Lin; Wang Jinfeng; Cao Rui. Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China. J. Finance Account. 2022, 10(1), 44-57. doi: 10.11648/j.jfa.20221001.15

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AMA Style

Liu Lin, Wang Jinfeng, Cao Rui. Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China. J Finance Account. 2022;10(1):44-57. doi: 10.11648/j.jfa.20221001.15

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@article{10.11648/j.jfa.20221001.15,
  author = {Liu Lin and Wang Jinfeng and Cao Rui},
  title = {Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China},
  journal = {Journal of Finance and Accounting},
  volume = {10},
  number = {1},
  pages = {44-57},
  doi = {10.11648/j.jfa.20221001.15},
  url = {https://doi.org/10.11648/j.jfa.20221001.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20221001.15},
  abstract = {The dividend policy has long been of interest among researchers that study financial management and corporate finance. Previous literatures mainly analyzed based on the agency theory, free cash flow theory, major shareholder benefit transfer channel or others, the impact of cost stickiness has not been considered in the framework. Using the data of listed companies in China from 2007 to 2017, this paper examines the effect of cost stickiness on cash dividend policy based on managers’ self-interest. The result shows that firms with stickier cost pay lower cash dividends than their peers. Corporate governance will impact the relation between cost stickiness and cash dividend payouts: when corporate governance is worse, the impact of cost stickiness on cash dividend payouts is great as managers of firms with more cash holdings are willing to keep cash for self-use rather than pay dividends. Further, this paper provides evidence that cost stickiness affects cash dividends by worsening corporate governance. This paper not only contributes to accounting literature on cost stickiness, but also sheds new light on the determinants of cash dividends policy.},
 year = {2022}
}

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TY  - JOUR
T1  - Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China
AU  - Liu Lin
AU  - Wang Jinfeng
AU  - Cao Rui
Y1  - 2022/01/28
PY  - 2022
N1  - https://doi.org/10.11648/j.jfa.20221001.15
DO  - 10.11648/j.jfa.20221001.15
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 44
EP  - 57
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20221001.15
AB  - The dividend policy has long been of interest among researchers that study financial management and corporate finance. Previous literatures mainly analyzed based on the agency theory, free cash flow theory, major shareholder benefit transfer channel or others, the impact of cost stickiness has not been considered in the framework. Using the data of listed companies in China from 2007 to 2017, this paper examines the effect of cost stickiness on cash dividend policy based on managers’ self-interest. The result shows that firms with stickier cost pay lower cash dividends than their peers. Corporate governance will impact the relation between cost stickiness and cash dividend payouts: when corporate governance is worse, the impact of cost stickiness on cash dividend payouts is great as managers of firms with more cash holdings are willing to keep cash for self-use rather than pay dividends. Further, this paper provides evidence that cost stickiness affects cash dividends by worsening corporate governance. This paper not only contributes to accounting literature on cost stickiness, but also sheds new light on the determinants of cash dividends policy.
VL  - 10
IS  - 1
ER  -

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Author Information

Liu Lin

School of Economics and Management, Beijing University of Chemical Technology, Beijing, China
Wang Jinfeng

School of Economics and Management, Beijing University of Chemical Technology, Beijing, China
Cao Rui

School of Economics and Management, Beijing University of Chemical Technology, Beijing, China

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Plain Text BibTeX RIS

APA Style

Liu Lin, Wang Jinfeng, Cao Rui. (2022). Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China. Journal of Finance and Accounting, 10(1), 44-57. https://doi.org/10.11648/j.jfa.20221001.15

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ACS Style

Liu Lin; Wang Jinfeng; Cao Rui. Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China. J. Finance Account. 2022, 10(1), 44-57. doi: 10.11648/j.jfa.20221001.15

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AMA Style

Liu Lin, Wang Jinfeng, Cao Rui. Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China. J Finance Account. 2022;10(1):44-57. doi: 10.11648/j.jfa.20221001.15

Copy | Download

@article{10.11648/j.jfa.20221001.15,
  author = {Liu Lin and Wang Jinfeng and Cao Rui},
  title = {Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China},
  journal = {Journal of Finance and Accounting},
  volume = {10},
  number = {1},
  pages = {44-57},
  doi = {10.11648/j.jfa.20221001.15},
  url = {https://doi.org/10.11648/j.jfa.20221001.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20221001.15},
  abstract = {The dividend policy has long been of interest among researchers that study financial management and corporate finance. Previous literatures mainly analyzed based on the agency theory, free cash flow theory, major shareholder benefit transfer channel or others, the impact of cost stickiness has not been considered in the framework. Using the data of listed companies in China from 2007 to 2017, this paper examines the effect of cost stickiness on cash dividend policy based on managers’ self-interest. The result shows that firms with stickier cost pay lower cash dividends than their peers. Corporate governance will impact the relation between cost stickiness and cash dividend payouts: when corporate governance is worse, the impact of cost stickiness on cash dividend payouts is great as managers of firms with more cash holdings are willing to keep cash for self-use rather than pay dividends. Further, this paper provides evidence that cost stickiness affects cash dividends by worsening corporate governance. This paper not only contributes to accounting literature on cost stickiness, but also sheds new light on the determinants of cash dividends policy.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Does Cost Stickiness Affect the Cash Dividend Policy: Empirical Evidence from China
AU  - Liu Lin
AU  - Wang Jinfeng
AU  - Cao Rui
Y1  - 2022/01/28
PY  - 2022
N1  - https://doi.org/10.11648/j.jfa.20221001.15
DO  - 10.11648/j.jfa.20221001.15
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 44
EP  - 57
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20221001.15
AB  - The dividend policy has long been of interest among researchers that study financial management and corporate finance. Previous literatures mainly analyzed based on the agency theory, free cash flow theory, major shareholder benefit transfer channel or others, the impact of cost stickiness has not been considered in the framework. Using the data of listed companies in China from 2007 to 2017, this paper examines the effect of cost stickiness on cash dividend policy based on managers’ self-interest. The result shows that firms with stickier cost pay lower cash dividends than their peers. Corporate governance will impact the relation between cost stickiness and cash dividend payouts: when corporate governance is worse, the impact of cost stickiness on cash dividend payouts is great as managers of firms with more cash holdings are willing to keep cash for self-use rather than pay dividends. Further, this paper provides evidence that cost stickiness affects cash dividends by worsening corporate governance. This paper not only contributes to accounting literature on cost stickiness, but also sheds new light on the determinants of cash dividends policy.
VL  - 10
IS  - 1
ER  -

Copy | Download