• Korean small business review
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• v.31 no.4
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• pp.67-93
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• 2009

The purpose of this paper is to explore the relations between financial constraints and dividend smoothing of innovative small and medium sized enterprises(SMEs) listed on Korea Securities Market and Kosdaq Market of Korea Exchange. The innovative SMEs is defined as the firms with high level of R&D intensity which is measured by (R&D investment/total sales) ratio, according to Chauvin and Hirschey (1993). The R&D investment plays an important role as the innovative driver that can increase the future growth opportunity and profitability of the firms. Therefore, the R&D investment have large, positive, and consistent influences on the market value of the firm. In this point of view, we expect that the innovative SMEs can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. And also, we expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Aivazian et al.(2006) exert that the financial unconstrained firms with the high accessibility to capital market can adjust dividend payment faster than the financial constrained firms. We collect the sample firms among the total SMEs listed on Korea Securities Market and Kosdaq Market of Korea Exchange during the periods from January 1999 to December 2007 from the KIS Value Library database. The total number of firm-year observations of the total sample firms throughout the entire period is 5,544, the number of firm-year observations of the dividend firms is 2,919, and the number of firm-year observations of the non-dividend firms is 2,625. About 53%(or 2,919) of these total 5,544 observations involve firms that make a dividend payment. The dividend firms are divided into two groups according to the R&D intensity, such as the innovative SMEs with larger than median of R&D intensity and the noninnovative SMEs with smaller than median of R&D intensity. The number of firm-year observations of the innovative SMEs is 1,506, and the number of firm-year observations of the noninnovative SMEs is 1,413. Furthermore, the innovative SMEs are divided into two groups according to level of financial constraints, such as the financial unconstrained firms and the financial constrained firms. The number of firm-year observations of the former is 894, and the number of firm-year observations of the latter is 612. Although all available firm-year observations of the dividend firms are collected, deletions are made in the case of financial industries such as banks, securities company, insurance company, and other financial services company, because their capital structure and business style are widely different from the general manufacturing firms. The stock repurchase was involved in dividend payment because Grullon and Michaely (2002) examined the substitution hypothesis between dividends and stock repurchases. However, our data structure is an unbalanced panel data since there is no requirement that the firm-year observations data are all available for each firms during the entire periods from January 1999 to December 2007 from the KIS Value Library database. We firstly estimate the classic Lintner(1956) dividend adjustment model, where the decision to smooth dividend or to adopt a residual dividend policy depends on financial constraints measured by market accessibility. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between current payout rato and target payout ratio each year. In the Lintner model, dependent variable is the current dividend per share(DPS_t), and independent variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t). We hypothesized that firms adjust partially the gap between the current dividend per share(DPS_t) and the target payout ratio(Ω) each year, when the past dividend per share(DPS_t-1) deviate from the target payout ratio(Ω). We secondly estimate the expansion model that extend the Lintner model by including the determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory. In the expansion model, dependent variable is the current dividend per share(DPS_t), explanatory variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t), and control variables are the current capital expenditure ratio(CEA_t), the current leverage ratio(LEV_t), the current operating return on assets(ROA_t), the current business risk(RISK_t), the current trading volume turnover ratio(TURN_t), and the current dividend premium(DPREM_t). In these control variables, CEA_t, LEV_t, and ROA_t are the determinants suggested by the residual dividend theory and the agency theory, ROA_t and RISK_t are the determinants suggested by the dividend signaling theory, TURN_t is the determinant suggested by the transactions cost theory, and DPREM_t is the determinant suggested by the catering theory. Furthermore, we thirdly estimate the Lintner model and the expansion model by using the panel data of the financial unconstrained firms and the financial constrained firms, that are divided into two groups according to level of financial constraints. We expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, because the former can finance more easily the investment funds through the market accessibility than the latter. We analyzed descriptive statistics such as mean, standard deviation, and median to delete the outliers from the panel data, conducted one way analysis of variance to check up the industry-specfic effects, and conducted difference test of firms characteristic variables between innovative SMEs and noninnovative SMEs as well as difference test of firms characteristic variables between financial unconstrained firms and financial constrained firms. We also conducted the correlation analysis and the variance inflation factors analysis to detect any multicollinearity among the independent variables. Both of the correlation coefficients and the variance inflation factors are roughly low to the extent that may be ignored the multicollinearity among the independent variables. Furthermore, we estimate both of the Lintner model and the expansion model using the panel regression analysis. We firstly test the time-specific effects and the firm-specific effects may be involved in our panel data through the Lagrange multiplier test that was proposed by Breusch and Pagan(1980), and secondly conduct Hausman test to prove that fixed effect model is fitter with our panel data than the random effect model. The main results of this study can be summarized as follows. The determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory explain significantly the dividend policy of the innovative SMEs. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between the current payout ratio and the target payout ratio each year. In the core variables of Lintner model, the past dividend per share has more effects to dividend smoothing than the current earnings per share. These results suggest that the innovative SMEs maintain stable and long run dividend policy which sustains the past dividend per share level without corporate special reasons. The main results show that dividend adjustment speed of the innovative SMEs is faster than that of the noninnovative SMEs. This means that the innovative SMEs with high level of R&D intensity can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. The other main results show that dividend adjustment speed of the financial unconstrained SMEs is faster than that of the financial constrained SMEs. This means that the financial unconstrained firms with high accessibility to capital market can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Futhermore, the other additional results show that dividend adjustment speed of the innovative SMEs classified by the Small and Medium Business Administration is faster than that of the unclassified SMEs. They are linked with various financial policies and services such as credit guaranteed service, policy fund for SMEs, venture investment fund, insurance program, and so on. In conclusion, the past dividend per share and the current earnings per share suggested by the Lintner model explain mainly dividend adjustment speed of the innovative SMEs, and also the financial constraints explain partially. Therefore, if managers can properly understand of the relations between financial constraints and dividend smoothing of innovative SMEs, they can maintain stable and long run dividend policy of the innovative SMEs through dividend smoothing. These are encouraging results for Korea government, that is, the Small and Medium Business Administration as it has implemented many policies to commit to the innovative SMEs. This paper may have a few limitations because it may be only early study about the relations between financial constraints and dividend smoothing of the innovative SMEs. Specifically, this paper may not adequately capture all of the subtle features of the innovative SMEs and the financial unconstrained SMEs. Therefore, we think that it is necessary to expand sample firms and control variables, and use more elaborate analysis methods in the future studies.

• Applied Biological Chemistry
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• v.21 no.3
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• pp.150-184
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• 1978

Nutritional characteristics and physio-chemical properties of mycelial growth and fruitbody formation of oyster mushroom(Pleurotus ostreatus)in synthetic media, the curtural condition for the commerical production in the rice straw and poplar sawdust media, and the changes of the chemical components of the media and mushroom during the cultivation were investigated. The results can be summarized as follows: 1. Among the carbon sources mannitol and sucrose gave rapid mycelial growth and rapid formation of fruit-body with higher yield, while lactose and rhamnose gave no mycelial growth. Also, citric acid, succinic acid, ethyl alcohol and glycerol gave poor fruit-body formation, and acetic acid, formic acid, fumaric acid, n-butyl alcohol, n-propyl alcohol and iso-butyl alcohol inhibited mycelial growth. 2. Among the nitrogen sources peptone gave rapid mycelial growth and rapid formation of fruit-body with higher yield, while D,L-alanine, asparatic acid, glycine and serine gave very poor fruit-body formation, and nitrite nitrogens, L-tryptophan and L-tyrosine inhibited mycelial growth. Inorganic nitrogens and amino acids added to peptone were effective for fruit-body growth, and thus addition of ammonium sulfate, ammonium tartarate, D,L-alanine and L-leucine resulted in about 10% increase fruit-body yield. L-asparic acid about 15%, L-arginine about 20%, L-glutamic acid, and L-lysine about 25%. 3. At C/N ratio of 15.23 fruit-body formation was fast, but the yield decreased, and at C/N ratio of 11.42 fruit-body formation was slow, but the yield increased. Also, at the same C/N ratio the higher the concentration of mannitol and petone, the higher yield was produced. Thus, from the view point of both yield of fruit-body and time required for fruiting the optimum C/N ratio would be 30. 46. 4. Thiamine, potassium dihydrogen phosphate and magnecium sulfate at the concentration of $50{\mu}g%$. 0.2% and 0.02-0.03%, respectively, gave excellent mycelial and fruit-body growth. Among the micronutrients ferrous sulfate, zinc sulfate and manganese sulfate showed synergetic growth promoting effect but lack of manganese resulted in a little reduction in mycelial and fruit-body growth. The optimum concentrati on of each these nutrients was 0.02mg%. 5. Cytosine and indole acetic acid at 0.2-1mg% and 0.01mg%, respectively, increased amount of mycelia, but had no effect on yield of fruit-body. The other purine and pyrimidine bases and plant hormones also had no effect on mycelial and fruit-belly yield. 6. Illumination inhibited mycelial growth, but illumination during the latter part of vegetative growth induced primordia formation. The optimum light intensity and exposure time was 100 to 500 lux and 6-12 hours per day, respectively. Higher intensity of light was injurous, and in darkness only vegetative growth without primordia formation was continued. 7. The optimum temperature for mycelial growth was $25^{\circ}C$ and for fruit-body formation 10 to $15^{\circi}C$. The optimum pH range was from 5.0 to 6.5. The most excellent fry it-body formation were produced from the mycelium grown for 7 to 10 days. The lesser the volume of media, the more rapid the formation of fruit-body; and the lower the yield of fruit-body; and the more the volume of media, the slower the formation of fruit-body, and the higher the yield of fruit-body. The primordia formation was inhibited by $CO_2$. 8. The optimum moisture content for mycelial growth was over 70% in the bottle media of rice straw and poplar sawdust. 10% addition of rice bran to the media exhibited excellent mycelial growth and fruit-body formation, and the addition of calciumcarbonate alone was effective, but the addition of calcium carbonate was ineffective in the presence of rice bran. 9. In the cultivation experiments the total yield of mushroom from the rice straw media was $14.99kg/m^2$, and from the sawdust media $6.52kg/m^2$, 90% of which was produced from the first and second cropping period. The total yield from the rice straw media was about 2.3 times as high as that from the sawdust media. 10. Among the chemical components of the media little change was observed in the content of ash on the dry weight basis, and organic matter content decreased as the cultivation progressed. Moisture content, which was about 79% at the time of spawning, decreased a little during the period of mycelial propagation, after which no change was observed. 11. During the period from spawning to the fourth cropping about 16.7% of the dry matter, about 19.3% of organic matter, and about 40% of nitrogen were lost from the rice straw media; about 7.5% of dry mallet, about 7.6% of organic matter, and about 20% of nitrogen were lost from the sawdust media. For the production of 1kg of mushroom about 232g of organic matter and about 7.0g of nitrogen were consumed from the rice straw media; about 235g of organic matter and about 6.8g of nitrogen were consumed from the sawdust media, 1㎏ of mushroom from either of media contains 82.4 and 82.3g of organic matter and 5.6 and 5.4g of nitrogen, respectively. 12. Total nitrogen content of the two media decreased gradually as the cultivation progressed, and total loss of insoluble nitrogen was greater than that of soluble nitrogen. Content of amino nitrogen continued to increase up to the third cropping time, after which it decreased. 13. In the rice straw media 28.0 and 13.8% of the total pentosan and ${\alpha}$-cellulose, respectively, lost during the whole cultivation period was lost during the period of mycelial growth; in the sawdust media 24.1 and 11.9% of the total pentosan and ${\alpha}$-cellulose, respectively, was lost during the period of mycelial growth. Lignin content in the media began to decrease slightly from the second cropping time, while the content of reduced sugar, trehalose and mannitol continued to increase. C/N ratio of the rice straw media decreased from 33.2 at spawining to 30.0 at ending; that of the sawdust media decreased from 61.3 to 60.0. 14. In both media phosphorus, potassium, manganese and zinc decreased, at magnesium, calcium and copper showed irregular changes, and iron had a tendency to be increased. 15. Enzyme activities are much higher in the rice straw media than in the sawdust media. CMC saccharifying and liquefying activity gradually increased from after mycelial propagation to the second cropping, after which it decreased in both media. Xylanase activity rapidly and greatly increased during the second cropping period rather than the first period. At the start of the third cropping period the activity decreased rapidly in the rice straw media, which was not observed in the sawdust media. Protease activity was highest after mycelial propagation, after which it gradually decreased. The pH of the rice straw media decreased from 6.3 at spawning to 5.0 after fourth cropping; that of the sawdust media decreased from 5.7 to 4.9. 16. The contents of all the components except crude fibre of the mushroom from the rice straw media were higher than those from the sawdust media. Little change was observed in the content of the components of mushroom cropped from the first to the third period, but slight decrease was noticed at the fourth cropping.