Asset redeployability and dividend payout policy

This research examines the effects of real asset redeployability on dividend payout policy, showing that firms with higher real asset redeployability tend to pay more dividends. Our results hold after controlling for cash holdings, current assets, and other firm characteristics. We hypothesize that asset redeployability increases dividend payout through the financial constraint channel, the signaling channel and the agency problem channel. Our empirical results suggest that all three channels are at play and that the positive effect is more pronounced for firms with more severe financial constraints, stronger signaling incentives, and for firms that have more severe free cash flow problems. Overall, our findings imply that asset re-deployability is an important determinant of corporate dividend payout policy. & COPY; 2023 Board of Trustees of the University of Illinois. Published by Elsevier Inc. All rights reserved.