The Dividend and Share Repurchase Policies of Taiwan Firms
|關鍵字:||股利政策;庫藏股;dividend policy;stock repurchase|
The stock repurchase and the cash dividend payment are the ways that firms distribute excess cash to shareholders. The difference between them is that the implementation of stock repurchase is more flexible comparing to that of cash dividend payment. According to dividend smoothing policy, firms won't change the dividend frequently if no necessary; however, firms can adjust stock repurchase program any time if they wish. This research explores the difference between the determinants of cash payout policy and policy-making behavior when they use different forms to distribute cash to shareholders. In this research, we found the choices between stock repurchase and cash dividend payment of firms depend on the magnitude in operating and non-operating cash flows. When firms have more operating cash flows, they are more likely to increase the cash dividend; when firms have more non-operating cash flows, they are more likely to increase to buy back the shares. This phenomenon demonstrates cash dividends are paid when operating cash flows are stable and stock repurchase is adopted when temporary non-operating cash flows are higher. Meanwhile, firm that paid cash dividend, the underperformance on stock price and firm’s value are also the reasons why the firms choose to repurchase the stock. By using nested logit model, we found that firms make cash payout policy in two stages. First, they make a decision whether to distribute the surplus cash flows. If the firms decide to adopt the cash distribution, they will make further decision as which the form of the cash distribution is adopted.
|Appears in Collections:||Thesis|
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