Do dividends mitigate bad news hoarding, overinvestments, and stock price crash risk?
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 3999-4038 |
| Journal / Publication | Accounting & Finance |
| Volume | 64 |
| Issue number | 4 |
| Online published | 4 Jul 2024 |
| Publication status | Published - Dec 2024 |
| Externally published | Yes |
Link(s)
Abstract
Using a large sample of US firms over the period of 1991–2015, we examine the economic benefits of paying dividends. We find that dividend payments mitigate stock price crash risk. We show that dividend payments reduce bad news hoarding (overinvestments) while bad news hoarding (overinvestments) is (are) positively associated with stock price crash risk, suggesting that curbing bad news hoarding and curtailing overinvestments are two channels through which dividends mitigate crash risk. Finally, our main results are robust to a battery of sensitivity checks including controls for potential endogeneity concerns. © 2024 Accounting and Finance Association of Australia and New Zealand.
Research Area(s)
- agency costs, bad news hoarding, crash risk, dividends, overinvestments
Citation Format(s)
Do dividends mitigate bad news hoarding, overinvestments, and stock price crash risk? / Kim, Jeong-Bon; Luo, Le; Xie, Hong.
In: Accounting & Finance, Vol. 64, No. 4, 12.2024, p. 3999-4038.
In: Accounting & Finance, Vol. 64, No. 4, 12.2024, p. 3999-4038.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
