 Dynamic corporate payout smoothing: A structural vector autoregressive modelAntonio Renzi, Pietro Taragoni and Gianluca Vagnani International Review of Financial Analysis, 2025, vol. 107, issue C Abstract: We utilize a structural vector autoregressive (SVAR) model and a variance decomposition methodology to augment the existing cross-sectional studies on corporate payout smoothing. Initially, we incorporate the net income shocks within a multi-equation framework using panel data, thus capturing the dynamic interplay between volatility in net income and various smoothing mechanisms, specifically debt and investments. Subsequently, under dynamic models and diverse structural shocks, we employ impulse response functions to elucidate the interdependencies of smoothing channels over time. Our model is implemented on a sample of organizations operating within U.S. financial markets. We compare our findings with predictions from cross-sectional corporate payout smoothing, offering robust empirical evidence of the dynamic interaction between debt and investments as smoothing channels within the context of the net income–payout variance relationship. Keywords: Payout smoothing; Debt and investment smoothing channels; Structural vector autoregressive model; Panel data (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:107:y:2025:i:c:s105752192500657x DOI: 10.1016/j.irfa.2025.104570 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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