The COVID-19 Pandemic and Corporate Dividend Policy

This paper shows for major equity markets that the proportion of index values attributable to the first five years of dividends dropped substantially in the first quarter of 2020 and that this drop has not been reversed by the end of the year. In the cross-section, this breakdown of dividend smoothing due to COVID-19 was less severe for firms with higher operating cash flows and more positively co-skewed stock returns and more pronounced for those with higher leverage and in the financial sector. Heavy dividend cutters also experienced a substantial increase in exposure to systematic risk.

Keywords: COVID-19 pandemic, dividends

JEL Classification: G12, G35

Suggested Citation: Suggested Citation

Cejnek, Georg and Randl, Otto and Zechner, Josef, The COVID-19 Pandemic and Corporate Dividend Policy (July 25, 2021). Journal of Financial and Quantitative Analysis, Volume 56 (7), pp. 2389-2410, 2021, Available at SSRN: https://ssrn.com/abstract=3576967 or http://dx.doi.org/10.2139/ssrn.3576967