Financial constraints and dividend policy
© The Author(s) 2015. Using a sample of US listed firms over the 1989–2012 period, we find that financially constrained dividend-increasing firms experience superior short-run abnormal stock returns, but suffer worse operating performance compared to similar unconstrained firms. More specifically, c...
| Main Authors: | , , , |
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| Format: | Journal Article |
| Language: | English |
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SAGE PUBLICATIONS LTD
2016
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| Subjects: | |
| Online Access: | http://hdl.handle.net/20.500.11937/76641 |
| _version_ | 1848763737097371648 |
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| author | Pathan, Md Shams Tabrize Faff, R. Méndez, C.F. Masters, N. |
| author_facet | Pathan, Md Shams Tabrize Faff, R. Méndez, C.F. Masters, N. |
| author_sort | Pathan, Md Shams Tabrize |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | © The Author(s) 2015. Using a sample of US listed firms over the 1989–2012 period, we find that financially constrained dividend-increasing firms experience superior short-run abnormal stock returns, but suffer worse operating performance compared to similar unconstrained firms. More specifically, constrained firms in more competitive industries realize poorer long-run and operating performance. Likewise, constrained firms that increase dividends during the financial crisis also deliver inferior post-dividend-increase long-run return than do unconstrained firms. We also find evidence that constrained firms show worse stock market reaction to new equity issue announcements following dividend increase, but display a positive market response if they potentially have high investment growth opportunities. Our results are robust to alternative financial constraint proxies and abnormal return measures. |
| first_indexed | 2025-11-14T11:08:13Z |
| format | Journal Article |
| id | curtin-20.500.11937-76641 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T11:08:13Z |
| publishDate | 2016 |
| publisher | SAGE PUBLICATIONS LTD |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-766412019-10-22T07:54:00Z Financial constraints and dividend policy Pathan, Md Shams Tabrize Faff, R. Méndez, C.F. Masters, N. Social Sciences Business Management Business & Economics Dividends financial constraints seasoned equity issues EARNINGS MANAGEMENT SHARE REPURCHASES MARKET-EFFICIENCY CORPORATE-FINANCE CASH HOLDINGS RETURNS PERFORMANCE INFORMATION INVESTMENT ANNOUNCEMENTS © The Author(s) 2015. Using a sample of US listed firms over the 1989–2012 period, we find that financially constrained dividend-increasing firms experience superior short-run abnormal stock returns, but suffer worse operating performance compared to similar unconstrained firms. More specifically, constrained firms in more competitive industries realize poorer long-run and operating performance. Likewise, constrained firms that increase dividends during the financial crisis also deliver inferior post-dividend-increase long-run return than do unconstrained firms. We also find evidence that constrained firms show worse stock market reaction to new equity issue announcements following dividend increase, but display a positive market response if they potentially have high investment growth opportunities. Our results are robust to alternative financial constraint proxies and abnormal return measures. 2016 Journal Article http://hdl.handle.net/20.500.11937/76641 10.1177/0312896214557835 English SAGE PUBLICATIONS LTD restricted |
| spellingShingle | Social Sciences Business Management Business & Economics Dividends financial constraints seasoned equity issues EARNINGS MANAGEMENT SHARE REPURCHASES MARKET-EFFICIENCY CORPORATE-FINANCE CASH HOLDINGS RETURNS PERFORMANCE INFORMATION INVESTMENT ANNOUNCEMENTS Pathan, Md Shams Tabrize Faff, R. Méndez, C.F. Masters, N. Financial constraints and dividend policy |
| title | Financial constraints and dividend policy |
| title_full | Financial constraints and dividend policy |
| title_fullStr | Financial constraints and dividend policy |
| title_full_unstemmed | Financial constraints and dividend policy |
| title_short | Financial constraints and dividend policy |
| title_sort | financial constraints and dividend policy |
| topic | Social Sciences Business Management Business & Economics Dividends financial constraints seasoned equity issues EARNINGS MANAGEMENT SHARE REPURCHASES MARKET-EFFICIENCY CORPORATE-FINANCE CASH HOLDINGS RETURNS PERFORMANCE INFORMATION INVESTMENT ANNOUNCEMENTS |
| url | http://hdl.handle.net/20.500.11937/76641 |