Dividend Policy and the COVID-19 Crisis

27 Pages Posted: 4 Nov 2020 Last revised: 25 Oct 2021

See all articles by Mieszko Mazur

Mieszko Mazur

ESSCA school of management

Man Dang

Danang University of Economics

Thi Thuy Anh Vo

University of Economics - University of Da Nang

Date Written: October 2020

Abstract

This paper examines dividend payment behavior of the S&P1500 firms during the COVID-19 crisis characterized by the stock market crash and a V-shaped stock price recovery propelled by technology stocks. We find that the great majority of firms either maintain or increase the level of dividend payment during the crisis period. Yet, the relationship between the dividend payout and bottom-line earnings available to common shareholders is significantly negative. This relationship holds even for dividend-increasing firms whose earnings streams should be relatively higher (or increasing) compared to other firms in the sample. We also find that forecast earnings of up to one year in the future are negatively associated with the current dividend level implying that the existing payout policies are unsustainable. Interestingly, we document similar patterns for stock repurchases.

Keywords: Dividend, Dividend Policy, COVID-19, Pandemic, Share Repurchases, Payout Policy, Agency Conflict

JEL Classification: G35; G32

Suggested Citation

Mazur, Mieszko and Dang, Man and Vo, Thi Thuy Anh, Dividend Policy and the COVID-19 Crisis (October 2020). Available at SSRN: https://ssrn.com/abstract=3723790 or http://dx.doi.org/10.2139/ssrn.3723790

Mieszko Mazur (Contact Author)

ESSCA school of management ( email )

55 Quai Alphonse le Gallo
Boulogne-Billancourt, 92513
France

Man Dang

Danang University of Economics ( email )

71 Ngu Hanh Son
Ngu Hanh Son
Danang City, Danang City 0511
Vietnam
+84905132054 (Phone)

Thi Thuy Anh Vo

University of Economics - University of Da Nang ( email )

71 Ngu Hanh Son
Ngu Hanh Son
Danang City, Danang City 0511
Vietnam

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

Paper statistics

Downloads
720
Abstract Views
2,154
rank
52,688
PlumX Metrics