The asymmetric response of dividends to earnings news
Jin Seo Cho (),
Matthew Greenwood-Nimmo and
Yongcheol Shin
Finance Research Letters, 2023, vol. 54, issue C
Abstract:
We provide new evidence of sign asymmetry in dividend payout policy in the postwar period in the U.S. Using a nonlinear autoregressive distributed lag model, we show that managers: (i) smooth the time-path of dividends relative to earnings; (ii) target a higher long-run payout ratio when earnings increase than when they decrease; and (iii) cut dividends faster than they raise dividends. Our findings are consistent with existing research on the implications of agency problems and signaling effects for payout policy.
Keywords: Payout policy; Dividend smoothing; Sign asymmetry; Two-step estimation (search for similar items in EconPapers)
JEL-codes: C22 C58 G35 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323001654
Full text for ScienceDirect subscribers only
Related works:
Working Paper: The Asymmetric Response of Dividends to Earnings News (2023) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001654
DOI: 10.1016/j.frl.2023.103792
Access Statistics for this article
Finance Research Letters is currently edited by R. Gençay
More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().