Corporate Financial Reconfiguration under Capital Scarcity

Standard financial constraints theory predicts that firms facing financing frictions conserve internal resources and reduce shareholder payout. Yet, across heterogeneous financing environments characterized by persistent uncertainty, institutional variation, and constrained access to capital, many financially constrained firms continue preserving shareholder distributions despite scarcity. Existing explanations rooted in signaling, agency concerns, dividend smoothing, or financial flexibility provide important insights into payout behavior but remain insufficient to explain why constrained firms repeatedly sustain payout under persistent financing frictions. This conceptual study develops a theoretical framework of corporate financial reconfiguration (CFR) to explain payout continuity under capital scarcity environments. We define CFR as the coordinated adaptation of interdependent financial policies through which firms reorganize payout, investment, leverage, and liquidity decisions while operating under persistent financing frictions and uncertainty. Rather than interpreting payout continuity as irrational financial behavior or a deviation from financial conservatism, the framework conceptualizes payout persistence as the observable outcome of coordinated organizational adaptation. We propose four mechanisms through which financially constrained firms may preserve payout: signaling preservation, future financing access, uncertainty reduction, and organizational continuity. The study further develops four financial reconfiguration pathways involving investment reduction, leverage expansion, liquidity adjustment, and continuity-oriented responses. Building upon these mechanisms, we derive empirically testable propositions and outline a research agenda emphasizing institutional heterogeneity, cross-country variation, and dynamic financing conditions. By shifting attention from isolated payout decisions toward coordinated financial adaptation, this study offers a broader explanation for payout continuity under scarcity and provides an empirically scalable framework for future international financial research.