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Testing the liquidity hypothesis in the Korean retail firms

Title
Testing the liquidity hypothesis in the Korean retail firms
Author
이정환
Keywords
Dividend Policy; Liquidity Hypothesis; Retail Industry
Issue Date
2017-05
Publisher
한국유통과학회
Citation
유통과학연구, v. 15, no. 5, page. 29-38
Abstract
Purpose – Prior theories predict a negative correlation between stock liquidity and dividend payout propensity. We test this hypothesis by examining the sample Korean retail firms. Research design, data, and methodology – We construct four different types of stock liquidity measures and investigate how these stock liquidity variables affect dividend payout propensity by employing the logit regression model. The retail firms listed in the KOSPI and KOSDAQ markets are analyzed from 1990 to 2015. Results – Our estimation results support the liquidity hypothesis if we adopt the stock turnover rate as the stock liquidity measure, particularly for the retail firms listed in the KOSPI markets and for non-conglomerate firms. Yet, our estimation results adopting the illiquidity measure of Amihud (2002), the proportion of non-trading day, and the volume of trading do not support the liquidity hypothesis. Conclusions – Our findings provide mixed results for the validity of stock liquidity hypothesis, which enriches the existing literature. In terms of turnover rate, the stock liquidity hypothesis holds robustly. Yet, we are not able to find any empirical evidence supporting the hypothesis if we use the other three measures of stock liquidity.
URI
https://www.kci.go.kr/kciportal/landing/article.kci?arti_id=ART002224905http://repository.hanyang.ac.kr/handle/20.500.11754/113924
ISSN
1738-3110; 2093-7717
DOI
10.15722/jds.15.5.201705.29
Appears in Collections:
COLLEGE OF ECONOMICS AND FINANCE[S](경제금융대학) > ECONOMICS & FINANCE(경제금융학부) > Articles
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