Trade-off among Dividend Payout and Capex Growth on Firm Performance

• Main Authors: Jiang, Yu-Lun, 江育倫
• Other Authors: Wang, Sue-Fung
• Format: Others
• Language: en_US
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/27434900532963173033

碩士 === 國立交通大學 === 財務金融研究所 === 98 === This paper is the first attempt to examine the relationship between the flow and stock of earnings and the dividend payout policy on firm performance. We also examine the relationship between growth opportunity and firm’s performance. The empirical results show that the firm with higher capital expenditures, that is, more growth opportunities, enjoys the better performance. Also, firms pay cash dividend will increase the share return, which is corresponding to signal effect. Profitable firms should pay higher cash dividend if there is no growth opportunity, which is corresponding to Free Cash Flow hypothesis. Firms have negative net income, retained earnings or FCF pay higher cash dividend will have lower Tobin’s Q. Firms with positive net income and negative retained earnings (or FCF) that pay higher cash dividend will have higher share return and ROA, which is also corresponding to signal effect. However, firms with negative net income and positive retained earnings (or FCF) that pay cash dividend will have lower share return and ROA, this result is not consistent with signal effect.