Financial Flexibility, Performance, and the Corporate Payout Choice
AbstractThis study examines the effect of financial flexibility and the level and certainty of operating performance on the choice to change dividends, pay special dividends, and repurchase shares. Firms that increase payouts have excess financial flexibility and exhibit positive concurrent income shocks and decreases in income volatility, but there is limited evidence of subsequent performance improvements. The results are opposite for firms that cut dividends. Thus, the decision to alter payout levels appears to convey information about contemporaneous income and changes in operating risk.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 78 (2005)
Issue (Month): 6 (November)
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Web page: http://www.journals.uchicago.edu/JB/
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- Luís Krug Pacheco & Clara Raposo, 2009. "ON the TIMING of INITIAL STOCK REPURCHASES," Working Papers de GestÃ£o (Management Working Papers) 06, Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto).
- Blau, Benjamin M. & Fuller, Kathleen P., 2008. "Flexibility and dividends," Journal of Corporate Finance, Elsevier, vol. 14(2), pages 133-152, April.
- Luís Krug Pacheco & Clara Raposo, 2009. "THE CAPITAL and CASH FLOW SOURCES and USES of INITIAL STOCK REPURCHASE FIRMS," Working Papers de GestÃ£o (Management Working Papers) 07, Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto).
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