Cost Stickiness, Firm’s Dividend Payouts, and Family Ownership
Keywords:
Cost stickiness, dividend payout, agency theory.Abstract
Our study enriches the growing literature on cost stickiness in the context of an emerging economy. The study examines the relationship between cost stickiness and dividend payout behavior in Pakistan, and the possibility of their being a moderating role of family ownership. Empirically, we employed 4,567 firm-year observations of non-financial firms listed on the Pakistan Stock Exchange, over the period 2006-2021, and used ordinary least squares regression method to test our hypotheses. Additionally, we used generalized method of moments techniques (GMM) to test the robustness of our results. Using the lens of agency theory, we find that cost stickiness is associated with higher dividend payouts. Further, family ownership moderates the relationship between cost stickiness and dividend payout. Overall, our results support cost stickiness in our sample of firms and a positive correlation of family ownership with dividend payout.
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