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Payout Flexibility and Firm Innovation
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This paper investigates how flexibility in payout decisions affects firm innovation. Firms that make payout mainly in the form of share repurchase have greater flexibility in making payouts compared to firms that make payout mainly in the form of dividends. I show that firms with greater payout flexibility have higher levels of innovation and have better quality innovations. Using a Granger-Causality framework, I show that firm innovation has no significant effect on payout flexibility while payout flexibility results in firm innovation.<br><br><br>Note: An updated version accepted at Journal of Accounting and Finance
Title: Payout Flexibility and Firm Innovation
Description:
This paper investigates how flexibility in payout decisions affects firm innovation.
Firms that make payout mainly in the form of share repurchase have greater flexibility in making payouts compared to firms that make payout mainly in the form of dividends.
I show that firms with greater payout flexibility have higher levels of innovation and have better quality innovations.
Using a Granger-Causality framework, I show that firm innovation has no significant effect on payout flexibility while payout flexibility results in firm innovation.
<br><br><br>Note: An updated version accepted at Journal of Accounting and Finance.
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