Can we predict dividend cuts?

I examine the predictability of dividend cuts based on the time interval between dividend announcement dates using a large dataset of US firms from 1971 to 2014. The longer the time interval between dividend announcements, the larger the probability of a cut in the dividend per share, consistent wit...

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Bibliographic Details
Published in:Economics letters 2016-09, Vol.146, p.71-76
Main Author: Onali, Enrico
Format: Article
Language:English
Subjects:
Asymmetric information
Dividend dates
Dividend policy
Dividends
Probability
Signalling theory
Studies
US capital market
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Summary:I examine the predictability of dividend cuts based on the time interval between dividend announcement dates using a large dataset of US firms from 1971 to 2014. The longer the time interval between dividend announcements, the larger the probability of a cut in the dividend per share, consistent with the view that firms delay the release of bad news. •I examine the predictability of dividend cuts using a large dataset of US firms from 1971 to 2014.•The longer the time interval between dividend announcements, the larger the probability of a dividend cut.•Early announcements increase the probability of an increase in the dividend per share.•These results are consistent with the view that firms delay the release of bad news.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2016.07.026