首页|Information asymmetry, agency costs, and payout policies: An international analysis of IFRS adoption and the global financial crisis

Information asymmetry, agency costs, and payout policies: An international analysis of IFRS adoption and the global financial crisis

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  • NETL
  • NSTL
  • Elsevier
Information asymmetry can affect the propensity of firms to pay dividends directly and indirectly by reducing the agency costs of free cash flow (FCF). However, designing a research framework to identify whether information asymmetry or agency cost directly explains the propensity to pay dividends is challenging, as both are partially endogenous. To overcome this challenge, this study investigates the role of two independent external shocks in explaining the propensity of firms to pay dividends. We use the mandatory adoption of International Financial Reporting Standards (IFRS) as an information asymmetry-reducing event and the global financial crisis (GFC) as an agency cost-reducing event to disentangle the effects of information asymmetry and agency costs. Using a large international sample of more than 100,000 firm-year observations and a matched sample of more than 35,000 observations, we find that the propensity to pay dividends declined after the mandatory adoption of IFRS and then declined further due to the economic shock of the GFC. We also provide evidence that firms facing high information asymmetry and high agency costs have a lower propensity to pay dividends because of the combined effects of IFRS adoption and the GFC. These findings suggest that the agency costs of FCF are more directly relevant in explaining dividend payout policy.

Agency costsDividend policyFinancial crisisIFRSInformation asymmetrySignaling

Wolfgang Bessler、Halit Gonenc、Mario Hernandez Tinoco

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Deutsche Bbrse Senior Empirical Capital Market Research Hamburg Business School University of Hamburg 20148 Hamburg Germany

Department of Economics, Econometrics and Finance, Faculty of Economics and Business, University of Groningen, Nettelbosje 2, 9747 AE Groningen, me Netherlands

Finance Department, EDHEC Business School 24 avenue Gustave Delory, CS 50411, 59057 Roubaix Cedex 1, France

2023

10.1016/j.ecosys.2023.101129

Economic systems

Economic systems

ISSN：0939-3625
年,卷(期)：2023.47(4)
  • 43