Financial Policy, Internal Control, and Performance: Sealed Air Corporation's Leveraged Special Dividend

Posted: 7 May 1998

See all articles by Karen H. Wruck

Karen H. Wruck

Ohio State University - Fisher College of Business, Department of Finance

Date Written: April 1994

Abstract

This paper examines the role of financial policy as a catalyst for organizational change. The subject is Sealed Air Corporation, a company with substantial free cash flow that undertakes a leveraged special dividend. While the stock price response to announcement is typical, Sealed Air exhibits dramatic, sustained, post-dividend performance improvement. Evidence indicates this performance results from managers? conscious and successful use of financial leverage as a tool to disrupt the status quo and promote internal change, including establishing a new objective, changing compensation systems, and reorganizing manufacturing and capital budgeting processes.

JEL Classification: G31, G32, G34, G35

Suggested Citation

Wruck, Karen H., Financial Policy, Internal Control, and Performance: Sealed Air Corporation's Leveraged Special Dividend (April 1994). Available at SSRN: https://ssrn.com/abstract=5352

Karen H. Wruck (Contact Author)

Ohio State University - Fisher College of Business, Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-4330 (Phone)
614-292-2418 (Fax)

HOME PAGE: http://https://fisher.osu.edu/people/wruck.1

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