Outlasting the Pandemic: Corporate Payout and Financing Decisions During COVID-19
58 Pages Posted: 10 Apr 2021 Last revised: 12 Jul 2021
Date Written: July 9, 2021
The outbreak of the Covid-19 pandemic massively increased uncertainty about firms’ cash flows and their access to financial markets. We examine its effect on firms’ strategies for preserving cash by suspending dividends and buybacks and raising new funds through bond and equity issues. We identify key firm and stock characteristics that help explain a large portion of the cross-sectional variation in firms’ payout and financing decisions and show that the expansive monetary policies pursued by the Federal Reserve in the early phase of the pandemic crucially affected the timing and sequencing of these decisions.
Keywords: COVID-19 pandemic; dividend suspensions; share repurchases; bond and equity issues; corporate actions; stock market reaction
JEL Classification: G14, G32, G35
Suggested Citation: Suggested Citation