The cash-flow permanence and information content of dividend increases versus repurchases

• 成果类型: Article
• 署名作者: Guay, W; Harford, J
• 署名单位: University of Oregon; University of Pennsylvania
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(00)00062-3
• 发表日期: 2000
• 页码: 385-415
• 关键词: Payout policy; Stock repurchase; buy-back; payout choice; Dividend signaling

摘要

We hypothesize that firms choose dividend increases to distribute relatively permanent cash-flow shocks and repurchases to distribute more transient shocks. As predicted, we find that post-shock cash flows of dividend increasing firms exhibit less reversion to pre-shock levels compared with repurchasing firms. We also examine whether the stock market uses the announcement of the payout method to update its beliefs about the permanence of cash-flow shocks. Controlling for payout size and the market's expectation about the permanence of the cash-flow shock, the stock price reaction to dividend increases is more positive than the reaction to repurchases. (C) 2000 Elsevier Science S.A. All rights reserved. JEL classification: G35; G32.