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The effect of skilled labor intensity on corporate dividend payouts

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  • Justin Hung Nguyen
  • Buhui Qiu

Abstract

This study shows that skilled labor‐intensive firms have lower dividend payouts. A one standard deviation increase in skilled labor intensity on average results in a 0.74 percentage point decline in the propensity to pay dividends and a 0.72 percentage point decrease in the dividend payout ratio. Our evidence suggests that greater labor adjustment costs (LACs) of skilled labor increase future cash flow uncertainty, which discourages managers from paying dividends. Consistently, we find that an exogenous increase (decrease) in LACs following the shock of 2017 H‐1B policy changes (the shock of 2005 Hurricane Katrina) leads treated firms to lower (heighten) their dividend payouts. Collectively, these findings indicate a strong dampening effect of LACs on corporate dividend payouts.

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  • Justin Hung Nguyen & Buhui Qiu, 2022. "The effect of skilled labor intensity on corporate dividend payouts," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(5-6), pages 963-1010, May.
    • Handle: RePEc:bla:jbfnac:v:49:y:2022:i:5-6:p:963-1010
    DOI: 10.1111/jbfa.12573
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