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| Author: | Jensen, G. Johnson, J. |
| Title: | The dynamics of corporate dividend reductions |
| Journal: | Financial Management
1995 : WINTER, VOL. 24:4, p. 31-51 |
| Index terms: | FINANCIAL MANAGEMENT DIVIDENDS MANAGEMENT |
| Language: | eng |
| Abstract: | The claim that dividend payments serve as signals to market participants is widely accepted. However, recent evidence has increased the uncertainty regarding the information conveyed when a firm drops its dividend. The authors' analysis extends prior research by examining twenty-one firm characteristics three years before and three years after a dividend drop. Consistent with past results, the authors find that firm earnings drop prior to a dividend reduction and increase afterwards. However, following a dividend drop, firms tend to reduce asset expenditures, external financing activities, employees, and spending on R&D. |
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