Working Paper

Export impact on dividend policy for big Colombian exporting firms, 2006–2014


  • Merchan
  • F.
Publication Date

This paper studies the impact of exogenous export demand shocks on firms’ dividend policy using firm specific real exchange rate variation as instrumental variable. IV exclusion restriction is plausibly satisfied because real exchange rate shocks were unanticipated -partly explained because of international oil price fluctuation-, and first stage statistics confirm relevance condition fulfillment. The results indicate that big private Colombian exporting firms initiated to decree effectively paid dividends as a way to mitigate the agency cost generated by exogeneous exports variation via higher free cash flow and higher cash flow volatility. The findings support partly the ‘outcome model’ within the agency cost theory and deny signaling.

Kiel Institute Expert


JEL Classification
F14, F10, G30, G32, G14, G35

Key Words

  • dividends
  • exports
  • agency cost
  • volatility
  • management