Abnormal Retained Earnings Around The World

Using a firm-level survey database covering 50 countries we evaluate firms´ abnormal retained earnings. The results of our work show that the trends of cash holdings and retained earnings are independent. The results of our work indicate that small firms retain less earnings. Such is a problem once a large percentage of firms around the world are small. On the hand, we find that abnormal retained earnings decreased after 2008 financial crisis. It seems that investors are more risk averse and prefer bird-on-hands (cash dividends). Our result also establish many plausible relationships among retained earnings, agency problems and financial constraints.