Manufacturing small-caps & dividend policy: Parallel between Brazilian and North American public companies

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Brazilian public companies with small capitalization of the manufacturing sector often reward their shareholders through dividend payments, contrasting to the default conduct observable in small-cap North American industrial companies. The research scope, twelve companies included on B3 small-cap index, focuses on understanding the internal financial factors which may influence these companies’ practices and possible causes for similar or

mismatching conduct, considering external, institutional, and macroeconomic factors. The author developed an econometrical model based on disposed of bibliography and original contribution, followed by statistical analysis adopting multiple linear regression to determine the statistical relevance of each variable and output comparison between Brazilian and North American small capitalization companies of dividend policy. The main results were that a

higher percentage of Brazilian small-cap dividend payments correlate with net income and net investment, diverging North American companies, demonstrating a minor share of companies as dividend payers and these dividends are correlated to free cash flow to equity. The Brazilian small-cap dividend policy tends to produce more volatile dividends, expressing

a demeanour to reward shareholders as much and faster as possible. At the same time, North American small-caps which do not focus on faster growth, aim for a dividend policy guided by stable, periodical, and ascending shareholder rewards.

Keywords: Dividend decision-making, Institutional factors, Market traits.

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Manufactoring Small Caps & Dividend Policy_Felipe Leite_07.25.2023_REVISION_v.6.pdf

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