The degree of rigidity of the products costs and the payment of dividends in the Brazilian capital market

Abstract

The objective of this research was to analyze the reflection of the degree of rigidity of the products costs sold (CPV) in the dividend payment policy of Brazilian non-financial companies with open capital, from 2005 to 2019. The study is based on the possibility of rigidity in the adjustments of the costs of products for companies that may not follow changes in revenues, including before a scenario of a decrease in the level of activity, compromising the result and its destinations, such as the payment of dividends. Based on the validation of the existence of rigidity in the costs behavior in the selected sample, through a regressive model, an asset intensity proxy was adopted to measure the degree of rigidity and its reflex in the payment of dividends, using the fixed effects panel data technique. As a result, evidence was obtained that CPV varies by 0.96% to increase by 1% in Net Sales Revenue, while it decreases by only 0.89% in the reverse. Whereas the increase in the degree of rigidity of costs reflects a decrease of 0.50 in dividends paid, which are also negatively impacted by financial leverage and positively by operational cash flows, according to research data. Thus, the study inferred that entities with a higher degree of rigidity in the cost structure tend to pay a lower level of dividends.