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Dividend Policy and the COVID-19 Crisis

Mieszko Mazur, Man Dang () and Thi Thuy Anh Vo ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines dividend payment behavior of the S&P1500 firms during the COVID-19 crisis characterized by the stock market crash and a V-shaped stock price recovery propelled by technology stocks. We find that the great majority of firms either maintain or increase the level of dividend payment during the crisis period. Yet, the relationship between the dividend payout and bottom-line earnings available to common shareholders is significantly negative. This relationship holds even for dividend-increasing firms whose earnings streams should be relatively higher (or increasing) compared to other firms in the sample. We also find that forecast earnings of up to one year in the future are negatively associated with the current dividend level implying that the existing payout policies are unsustainable. Interestingly, we document similar patterns for stock repurchases.

Keywords: Dividend Policy; Dividend Yield; Share Repurchases; COVID-19 (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-cfn
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