The US financial crisis and corporate dividend reactions: for better or for worse?

We examine how changes in dividend policy in 2008 as the financial crisis was unfolding influenced firm risk-adjusted returns in the following years. Our sample consists of NYSE- and NASDAQ-traded firms that paid dividends in 2007. We divide these firms into four groups based on their dividend polic...

Full description

Saved in:
Bibliographic Details
Published in:Review of quantitative finance and accounting 2019-11, Vol.53 (4), p.1165-1193
Main Authors: Hilliard, Jitka, Jahera, John S., Zhang, Haoran
Format: Article
Language:English
Subjects:
Accounting/Auditing
Companies
Corporate Finance
Corporate governance
Dividend distributions
Dividend policy
Dividends
Econometrics
Economic conditions
Economic crisis
Economics and Finance
Finance
Operations Research/Decision Theory
Original Research
Policy making
Risk adjustment
Weather
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We examine how changes in dividend policy in 2008 as the financial crisis was unfolding influenced firm risk-adjusted returns in the following years. Our sample consists of NYSE- and NASDAQ-traded firms that paid dividends in 2007. We divide these firms into four groups based on their dividend policy in 2008. We find that firms that decreased or eliminated dividends in 2008 had higher risk-adjusted returns in 2009. The higher risk-adjusted return is consistent with the better corporate governance in 2007. This finding suggests that the firms that quickly reacted to the deteriorating economic conditions by cutting dividends and preserving cash were able to better weather the coming financial crisis.
ISSN:0924-865X
1573-7179
DOI:10.1007/s11156-018-0778-6