Cross institutional cash and dividend policies: focusing on Brazilian firms

Mar𨁂el鮠 Lozano and Simone Caltabiano

Applied Economics, 2015, vol. 47, issue 3, 239-254

Abstract: This article analyses the determinants of cash holding and dividends and the relation existing between them in the institutional framework of Brazil, an emerging market on the world scenario. It also presents specific cultural and institutional characteristics. Through the panel data methodology, we show how peculiar the behaviour of Brazilian firms is, surprisingly quite different from the traditional theories and stereotypes. It was found that they have lower cash holdings and pay higher dividends compared to the UK market. In addition, analysis of the relation between these two policies showed a positive relation, together with other closely related items such as the relevant effect of profitability and investment opportunities. All this leads us to confirm the importance of the institutional framework in the financial decisions taken in the Brazilian market.

Date: 2015
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DOI: 10.1080/00036846.2014.967516

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