Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271029 
Year of Publication: 
2023
Series/Report no.: 
Kiel Working Paper No. 2243
Publisher: 
Kiel Institute for the World Economy (IfW Kiel), Kiel
Abstract: 
This paper studies the impact of exogenous export demand shocks on firms' dividend policy using firm specific real exchange rate variation as instrumental variable. IV exclusion restriction is plausibly satisfied because real exchange rate shocks were unanticipated -partly explained because of international oil price fluctuation-, and first stage results confirm relevance condition fulfillment. The results indicate that big private Colombian exporting firms decree dividends as a way to mitigate the agency cost generated by exogeneous exports variation via higher free cash flow and cash flow volatility, especially in poor managerial quality firms. Evidence supports agency cost theory and denies signaling.
Subjects: 
dividends
exports
agency cost
free cash flow
volatility
JEL: 
F14
F10
G30
G32
G14
G35
Document Type: 
Working Paper

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