The US Financial Crisis and Corporate Dividend Reactions: For Better or for Worse?

28 Pages Posted: 3 Dec 2014

See all articles by Jitka Hilliard

Jitka Hilliard

Auburn University

John S. Jahera

Auburn University - Harbert College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2014

Abstract

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 following years. 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 incoming financial crises.

Keywords: Dividends, payout policy, financial crisis

JEL Classification: G35

Suggested Citation

Hilliard, Jitka and Jahera, John S., The US Financial Crisis and Corporate Dividend Reactions: For Better or for Worse? (December 1, 2014). Available at SSRN: https://ssrn.com/abstract=2532650 or http://dx.doi.org/10.2139/ssrn.2532650

Jitka Hilliard (Contact Author)

Auburn University ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States
334-844-5520 (Phone)

John S. Jahera

Auburn University - Harbert College of Business ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States
334-844-5344 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
167
Abstract Views
862
Rank
201,875
PlumX Metrics