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Does foreign currency-denominated debt affect dividend payout policy? Evidence from Korea

Young Mok Choi and Kunsu Park

Journal of Multinational Financial Management, 2019, vol. 49, issue C, 20-34

Abstract: This study examines the effect of foreign currency-denominated debt on dividend payouts in the context of risk hedging and debt financing costs. We find that firms with a higher proportion of foreign currency debt are more likely to pay dividends; furthermore, we also find that these firms pay higher dividends. We further find that the positive relation between the proportion of foreign currency debt and dividend payouts is more pronounced in firms with lower credit risk and cash flows than their counterparts. Our results are robust to alternative estimation methods, endogeneity concerns, and alternative proxies for foreign currency debt and dividend payouts.

Keywords: Foreign currency-denominated debt; Dividend policy; Hedging; Debt financing costs (search for similar items in EconPapers)
JEL-codes: F31 G32 G35 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:49:y:2019:i:c:p:20-34

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