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Has the ECB’s Monetary Policy Prompted Companies to Invest or Pay Dividends?

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Cohen, Lior and Gómez-Puig, Marta and Sosvilla-Rivero, Simón (2019) Has the ECB’s Monetary Policy Prompted Companies to Invest or Pay Dividends? [ Documents de treball (Institut de Recerca en Economia Aplicada Regional i Pública (IREA)); nº 01, ISSN: 2014-1254 ]

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Official URL: http://hdl.handle.net/2445/127691



Abstract

This paper focuses on how the European Central Bank’s (ECB) monetary policies influenced non-financial firms. The paper’s two main contributions are, first, to shed light on non-financial firms’ decisions on leverage, and how the ECB’s conventional and unconventional policies may have affected them. Second, the paper also examines how these policies influenced nonfinancial firms’ decisions on capital allocation – primarily capital spending and shareholder distribution (for example, dividends and shares repurchases). Towards this end, we use an exhaustive and unique dataset comprised of income statements and balance sheets of leading non-financial firms that operate in the European Economic and Monetary Union (EMU). The main results suggest that ECB’s monetary policies have encouraged firms to raise their debt burden especially after the global recession of 2008. Finally, the ECB’s policies, mainly after 2011, seem to have also stimulated non-financial firms to allocate more resources towards not only capital spending but also shareholder distribution.


Item Type:Working Paper or Technical Report
Uncontrolled Keywords:ECB’s monetary policy, Capital structure, Leverage, Quantitative easing, Capital expenditure, Dividend’s policy, Shareholder yield.
Subjects:Social sciences > Economics > Banks and credit unions
Social sciences > Economics > Public economy
Social sciences > Economics > Finance
JEL:E52, E58, G31, G32
Series Name:Documents de treball (Institut de Recerca en Economia Aplicada Regional i Pública (IREA))
Volume:
Number:01
ID Code:60135
Deposited On:23 Apr 2020 11:10
Last Modified:24 Apr 2020 07:32

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