1. Does the information content of payout initiations and omissions influence firm risks?
- Author
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Abhinav Goyal, Cal Muckley, J. Henk von Eije, and Research programme EEF
- Subjects
Cash dividend ,EARNINGS ,Economics and Econometrics ,Total risk ,Monetary economics ,Systematic risk ,STOCK REPURCHASES ,ESTIMATORS ,Repurchases ,Dividends ,Earnings ,Systematic firm risks ,Applied Mathematics ,Share repurchase ,Idiosyncratic risk ,Self-selection ,RETURNS ,Omissions ,SAMPLE PROPERTIES ,Initiations ,Propensity score matching ,PROPENSITY-SCORE ,Dividend ,Business ,DISAPPEARING DIVIDENDS ,SHARE REPURCHASES - Abstract
We study the influence on firm risks of NASDAQ and NYSE firm payout initiations and omissions. These payout events can be interpreted as managerial signals of firm financial life-cycle maturation resulting in concomitant changes in firm risks. We remove confounding payout types and we match on the propensity to initiate or omit informed by determinants of payout known to investors in advance. For payout event and matched firms, we apply the difference-in-differences method to estimate the effect of the information content of actual initiations and omissions on firm risks. We find consistent significant declines in total, aggregate systematic, and idiosyncratic firm risks after cash dividend initiations and increases after dividend omissions, but only incidentally after share repurchase initiations and omissions. (C) 2014 Elsevier B.V. All rights reserved.
- Published
- 2014