Abstract
This paper examines and compares the dividend policies of American depository receipt (ADR) firms and U.S. firms and identifies the factors that determine these policies for both types of companies. We find that ADR firms have higher dividend yields than U.S. firms, while U.S. firms have higher stock repurchase ratios than ADR firms. Results from univariate comparisons and multivariate analysis show that the determining factors of dividend payout and stock repurchases differ between these two types of firms. This finding holds for the robustness check conducted in this study. This paper provides further evidence regarding dividend policies of ADR firms and sheds light on the differences in dividend policies between non-U.S. firm and U.S. firms.
Highlights
Throughout the past few decades, a large body of literature has explored corporate dividend policies from various perspectives, and researchers have achieved much progress far (Lintner 1956; Miller and Modigliani 1961; Baker and Wurgler 2004; DeAngelo et al.2004; Denis and Osobov 2008; Skinner 2008)
The regression results of Model 1 reveal that the dividend payout ratio and Tobin’s Q are positively related to dividend yield, while firm size and returns on assets (ROA) are negatively associated with dividend yield
This paper examined the dividend policies of American depository receipt (ADR) firms and U.S firms and identifies the determining factors of dividend yield, dividend payout, and stock repurchases for these two types of firms
Summary
Throughout the past few decades, a large body of literature has explored corporate dividend policies from various perspectives, and researchers have achieved much progress far (Lintner 1956; Miller and Modigliani 1961; Baker and Wurgler 2004; DeAngelo et al.2004; Denis and Osobov 2008; Skinner 2008). Most of the extant research about dividend policies is based on sample firms from the United States or other developed countries, which means that the findings of these studies cannot be applied to emerging economies (Jabbouri 2016). This paper makes incremental contributions through the new findings that ADR firms exhibit higher dividend yields and lower stock repurchase ratios than U.S firms. The determining factors for dividend yields and stock repurchase ratios differ between ADR firms and S&P 500 firms. The findings provide more evidence about the determining factors of cash distribution policy for ADR firms. Our finding shows that ADR firms’ dividend policies and stock repurchase policies differ from those of U.S firms.
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