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Corporate Payout Policy and Bad-News Hoarding

Author

Listed:
  • Dimitrios Anastasiou

    (Athens University of Economics and Business - Department of Business Administration)

  • Athanasios Michairinas

    (Athens University of Economics and Business - Department of Business Administration)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

  • Athanasios Sakkas

    (Athens University of Economics and Business - Department of Business Administration)

Abstract

We investigate how G7-listed firms (2000–2023) adjust payout policies when facing stock price crash risk, which proxies for investor concerns about bad-news hoarding. Exposed firms increase dividends and repurchases to reassure investors, shifting their payout mix toward dividends given their stronger commitment value. However, these stabilizing payouts entail real economic costs: under high crash risk, firms, especially smaller ones, fund payouts by cutting CAPEX and R&D. Driven by an agency/free-cash-flow channel, these commitments discipline liquidity and signal confidence. Ultimately, payout policy serves as a vital tool to manage crash risk, albeit at the expense of long-term investment.

Suggested Citation

  • Dimitrios Anastasiou & Athanasios Michairinas & Steven Ongena & Athanasios Sakkas, 2026. "Corporate Payout Policy and Bad-News Hoarding," Swiss Finance Institute Research Paper Series 26-38, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2638
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