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.
| Original language | English |
|---|---|
| Pages (from-to) | 3999-4038 |
| Journal | Accounting & Finance |
| Volume | 64 |
| Issue number | 4 |
| Online published | 4 Jul 2024 |
| DOIs | |
| Publication status | Published - Dec 2024 |
| Externally published | Yes |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 3 Good Health and Well-being
Research Keywords
- agency costs
- bad news hoarding
- crash risk
- dividends
- overinvestments
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