Dividend Dynamics in the Shipping Industry: A Panel Data Analysis of Partial Adjustment Models

Ioannis Chasiotis,Vasilios-Christos Naoum,Dimitrios Konstantios

doi:10.4236/tel.2021.115063

Abstract

This study explores the dividend dynamics of globally-listed firms in the idiosyncratic maritime sector. Employing an array of dynamic panel estimators in a sample of globally-listed shipping firms for the period 1988 to 2019 we provide empirical evidence that the degree of dividend smoothing (speed of adjustment) in the maritime sector is comparatively lower (higher). We also show that the speed of adjustment after deviations from the target is significantly higher in recession states. Our results document higher flexibility in the shipping industry’s dividend payouts, reflecting its distinct traits that amplify the adverse impacts of financing shocks.

Highlights

The theoretical and empirical analysis of the dividend decision constitutes a focal point in corporate finance research. Lintner’s (1956) seminal study evidences the tendency of firms to exercise a stable dividend policy, where current dividends are set according to their former levels
We show that the speed of adjustment after deviations from the target is significantly higher in recession states
Our results indicate that the maritime sector exhibits a comparatively higher flexibility in dividends which is further amplified in recession states

Summary

Introduction

The theoretical and empirical analysis of the dividend decision constitutes a focal point in corporate finance research. Lintner’s (1956) seminal study evidences the tendency of firms to exercise a stable dividend policy, where current dividends are set according to their former levels. The theoretical and empirical analysis of the dividend decision constitutes a focal point in corporate finance research. Lintner’s (1956) seminal study evidences the tendency of firms to exercise a stable dividend policy, where current dividends are set according to their former levels. Firms appear to have a long-term target payout to which they adjust slowly after unexpected increases in earnings. This behavior, known as dividend smoothing is one of the most pronounced and well-documented phenomena in corporate finance research (Leary & Michaely, 2011). Relevant empirical studies utilize national and inter-.

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Conclusion