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Distressed Firms and Dividend Reductions

Author

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  • Steven C. Hall
  • Vipin K. Agrawal
  • Pushpa Agrawal

Abstract

We are interested in the effects of dividend reduction decisions on the firms that make them. We compare financial ratios of distressed dividend-reducing firms to distressed firms that did not reduce dividends, of nondistressed dividend-reducing firms to nondistressed firms that did not reduce dividends, and ratios of distressed dividend- reducing firms to nondistressed dividend-reducing firms. Results indicate benefits of dividend reductions to both distressed and nondistressed firms. We find a cost to nondistressed firms, i.e., a drop in the market value of the firm in the year following the dividend reduction.

Suggested Citation

  • Steven C. Hall & Vipin K. Agrawal & Pushpa Agrawal, 2019. "Distressed Firms and Dividend Reductions," Accounting and Finance Research, Sciedu Press, vol. 8(1), pages 222-222, February.
    • Handle: RePEc:jfr:afr111:v:8:y:2019:i:1:p:222
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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