Two Essays on Payout Policy: Strategic Interaction Effects and Union Effects
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Previous literature on payout policy has focused on the effects of firm-level characteristics on firms' dividend payouts or stock repurchases. My dissertation investigates whether industry characteristics affect these payout decisions. The first chapter focuses on effects of strategic interaction between firms in product markets on a firm's dividend policy, and the second chapter examines effects of input market rigidity, particularly the strength of labor unions, on corporate payout policy. My empirical results show that these industry characteristics significantly influence firms' payout policy, and their economic impacts are non-trivial. Overall, my dissertation suggests that research in corporate payout policy should incorporate the effects of industry characteristics on firms' optimal payout decisions.