Performance
Announcing Growth-induced Dividend Cut: Good News for Shareholders?
Créé le
01.12.2020This article deals with the announcement of growth-induced dividend cuts in the short and long run to understand the shareholder value creation associated and compare these returns to companies announcing dividend cut as a result of poor performance.
Dividends have been subject to extensive debate amongst financial theorists in the past decades. When a company starts to generate earnings, the decision of paying dividends to shareholders or reinvesting the surplus in the business becomes crucial. Indeed, for investors, this decision conveys information about a firm’s expected future performance in order to ascertain the true value of the firm and to mitigate agency costs.
Up until now, most studies on dividend distribution have concluded that a change in dividend policy results in a reaction from market participants in the form of a change ...