The impact of XBRL adoption on corporate dividend policy: Evidence from Korean firms

Abstract

Background/Objectives: The objective of this paper is to examine the impact of XBRL adoption on corporate dividend policy using a sample of Korean firms. Methods/Statistical Analysis: We use logistic regressions with a binary dependent variable, XBRL dummy, to investigate the relation between XBRL adoption and the likelihood of paying dividends. We also employ fixed effects panel regressions with dependent variables, dividend payout, dividend yield and dividend to assets, to examine the influence of XBRL adoption on the level of dividends. Findings: Our findings are as follows. First, for the logistic regression, we find that XBRL adoption is negatively related to the likelihood of paying dividends, indicating that firms are less likely to pay dividends after XBRL adoption. Second, for the fixed effects panel regression, we find a negative relation between XBRL adoption and the level of dividends, suggesting that firms pay lower dividends after XBRL adoption. Improvements: This study extends prior studies that XBRL adoption can mitigate a firm's information asymmetry in the perspective of corporate finance. This study also contributes to the literature on dividend policy by providing evidence that XBRL adoption affects corporate dividend policy. Overall, the result suggests that the XBRL plays a role in the determination of corporate dividend policy.