Has the ECB’s monetary policy prompted companies to invest, or pay dividends?

Abstract

Institute of Applied Economics (IREA) in Barcelona was founded in 2005, as a research institute in applied economics. Three consolidated research groups make up the institute: AQR, RISK and GiM, and a large number of members are involved in the Institute. IREA focuses on four priority lines of investigation: (i) the quantitative study of regional and urban economic activity and analysis of regional and local economic policies, (ii) study of public economic activity in markets, particularly in the fields of empirical evaluation of privatization, the regulation and competition in the markets of public services using state of industrial economy, (iii) risk analysis in finance and insurance, and (iv) the development of micro and macro econometrics applied for the analysis of economic activity, particularly for quantitative evaluation of public policies. IREA Working Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. For that reason, IREA Working Papers may not be reproduced or distributed without the written consent of the author. A revised version may be available directly from the author. Any opinions expressed here are those of the author(s) and not those of IREA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions.

Dividend policy and residual dividend theory: evidence from Indonesia

“…These businesses may decide to invest more sensibly and distribute their money more carefully, affecting their dividend policy. Companies in the middle quintile may have particular strategic objectives concerning debt reduction, market share gain, or expansion (Alghifari et al ., 2022; Cohen et al ., 2019; Nguyen, 2019). Aside from this, variations in the influence there is on different quintiles can also be caused by the impact of capital expenditure on the future cash flows and operational efficiency of these companies (Diaw, 2021; Nguyen and Nguyen, 2020).…”

What to Do with the ECB's Secondary Mandate

“…The ECB's bond purchase programmes have had a big economic impact. Companies have used low interest rates to invest, but also to buy their own shares and pay dividends (Cohen et al, 2019). By driving up the price of financial assets and real estate, Europe's asset owners have been amongst the biggest beneficiaries of these programmes (Dossche et al, 2021).…”

Cash Dividends and Share Repurchases in Ukrainian Pharmaceutical Companies

“…Various events giving rise to political risk can trigger companies to minimize or retain dividends due to the increased cost of borrowing funds (Huang et al, 2015). In this aspect, the study of the European Central Bank monetary policy established that falling interest rates bring investments up, which in turn encourages dividends and share repurchases (Cohen et al, 2019).…”