search query: @author Harford, J. / total: 7
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| Author: | Guay, W. Harford, J. |
| Title: | The cash-flow permanence and information content of dividend increases versus repurchases |
| Journal: | Journal of Financial Economics
2000 : SEP, VOL. 57:3, p. 385-415 |
| Index terms: | Stock markets Policy Dividends Information |
| Language: | eng |
| Abstract: | This paper hypothesizes firms choosing dividend increases to distribute relatively permanent cash-flow shocks and repurchases to distribute more transient shocks. As predicted, it is found that post-shock cash flows of dividend increasing firms exhibit less reversion to pre-shock levels compared with repurchasing firms. The paper also examines whether the stock market uses the announcement of the payout method to update its beliefs about the permanence of cash-flow shocks. Controlling for payout size and the market's expectation about the permanence of the cash-flow shock, the stock price reaction to dividend increases is more positive than the reaction to repurchases. |
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