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The purpose of this paper is to describe and compare the mean response for selected financial variables in three dividend paying groups before and after the financial crisis of 2008. Dividend initiators are expected to be rewarded by investors over traditional dividend paying firms.

Quarterly CRSP data from 2000 to 2012 are used to define dividend paying groups. Highly unbalanced financial data on dividend paying firms are analyzed in two truncated sample periods defined before and after the financial crisis. Fitted models describing differences in dividend paying groups are based on the linear mixed model representation of penalized splines with random effects to account for repeated measures over time.

Results are presented on the important differences in selected financial variables before and after the financial crisis by dividend paying pattern group (traditional, initiators, residual/catering). Special emphasis is given to the analysis of market/book value ratio. Results demonstrate dividend initiators are rewarded over traditional dividend firms by investors. Firms with an intermittent paying pattern have no advantage. All dividend paying firms grow during the 2008 financial crisis. Traditional dividend payers have larger size than other dividend payers. The size effect explains results for several of the financial variables studied.

Future work can include an industry effect on the three dividend paying groups.

Investors appear to prefer certainty as to when they receive a dividend over uncertainty, especially in times of economic downturn and economic recovery.

Enhanced awareness that different payment patterns exist and are rewarded differently over time on both the corporate issuer and investor sides.

This study adds to body of knowledge of practical dividend payment patterns around a financial crisis. It also provides added support for dividend initiators.

The purpose of this paper is to investigate whether corporate dividend policy changed during the financial crisis.

For this study, a life‐cycle model is used to predict the probability that a firm pays a dividend. The data sample for this research follows that of Fama and French and of DeAngelo et al., for the time period of 2006‐2009. The panel logistic regression analysis considers the firm cluster effects and the autoregressive correlation of the firm clusters.

This study shows evidence that the probability that a firm paid a dividend declined in 2008 and 2009, even after taking the firm's financial condition into account. Furthermore, the analysis also shows that dividend policy did shift during the financial crisis.

The results of this study show that dividend policy did shift during the financial crisis. The research provides evidence that firms placed additional emphasis on financial viability after the financial crisis.

Purpose– The purpose of this paper is to examine cross‐sectional differences in the profits, returns and risk of high‐ and low‐market‐to‐book ratios (M/B) stocks before and after the initiation of regular cash dividend payments. Design/methodology/approach– This study uses parametric and non‐parametric statistics and ordinary least squares regression to test for differences in the profits, returns and risk of high‐ and low‐M/B stocks before and after dividend initiation. Findings– Low‐M/B stocks display the most positive price reaction to dividend initiation announcements. High‐M/B firms have larger profits, cash levels and capital expenditure before and at the time of dividend initiation, but more closely resemble the low‐M/B firms in terms of these characteristics within three years following dividend initiation. Excess returns earned by low‐M/B firms are related to decreases in systematic risk, while the returns of high‐M/B firms are related to their higher profitability. Research limitations/implications– Averaging results from 1965‐2000 does not account for possible changes in the information content of dividend initiations over time (as evidenced by steadily declining dividend yields over this period). Practical implications– The findings are consistent with the idea that firms begin paying dividends as they are maturing into a slower growth period, and do not support the idea that dividend initiation signals faster future earnings growth. Originality/value– The analysis adds to the body of knowledge by explicitly conditioning the expectations from various dividend theories based upon individual firms’ growth phase as reflected in their M/B ratios, and suggests that signaling, agency and risk explanations for dividends must be considered jointly with a firm's growth prospects when studying dividend events.

As a financial policy, dividend policy significantly affects firm value. This chapter analyzes how stock prices react to dividend decisions. First, a dividend payment is an extraction of value; therefore, stock price theoretically drops by the dividend amount on the ex-dividend day. In practice, the price drop and the dividend magnitude are not equal because of tax clientele, short-term trading, and market microstructure. Investors are indifferent in trading stocks before and after stocks go ex-dividend if they obtain equal marginal benefits from the two trading times. The difference in tax rates on dividends and capital gains leads to the gap between the price drop and the dividend amount. Moreover, if transaction costs are considerable, investors have high incentives to short-sell stocks until they cannot obtain more profits. The final outcome of this short-term trading is the difference between the price drop and the dividend amount. Furthermore, market microstructure factors such as limit orders, bid-ask spread, and price discreteness also create this gap. Second, dividend announcements convey valuable information to outsiders. When firms announce increases (decreases) in dividends, their stock prices tend to increase (decrease). Third, dividend policy is negatively related to stock price volatility. This negative relationship is explained by duration effect, rate of return effect, arbitrage realization effect, and information effect. Empirical evidence for this relationship is found in many countries. Finally, dividend smoothing is also considered as a signal about firms' future earnings. Consequently, firms with stable dividends have higher market value. In other words, dividend stability has a positive effect on stock prices.

The purpose of this paper is to examine the dividend initiation announcements made by firms in the information technology sector as defined in a modern system of industrial classification.

On the basis of a modern classification of the information technology industry, the authors examine a wide range of corporate performance and management measures to discriminate between the two theories of the information revealed by the announcement of dividend initiations, the signaling, and life cycle theories.

The empirical results are more consistent with the corporate life cycle theory of dividends than with the information signaling hypothesis. This finding helps clarify the nature of the information revealed by the announcement.

The paper has clear implications for investors who are interested in the growth prospects of technology firms, or for others interested in their prospective stability and degree of maturity.

The purpose of this paper is to investigate how and why a firm’s product market power affects its dividend policy.

This paper uses three measures of market power? The degree of import competition, Herfindahl-Hirschman index, and Lerner Index? To examine how a firm’s product market power affects its dividend policy. Further, it proposes and tests a risk-based explanation for this impact.

This paper shows that market power positively affects the dividend decision, in terms of both the probability of paying a dividend and the amount of dividend payment. It also provides evidence that the route through which market power affects the dividend decision is business risk: firms with less market power are riskier and hence less likely to pay dividends than firms with more market power.

The results show that product market power may have played an important role in reshaping dividend policy of corporate America.

This study documents the relevance of market power behind dividend policy and therefore adds to the knowledge on the relationship between product markets and corporate financial policies, which is an important and understudied area of corporate finance.

The purpose of this paper is to examine the dividend payments and share repurchases of dual-class firms that have both their superior voting shares and inferior voting shares publicly traded.

This paper uses matched dual-class and single-class samples from 1994 to 2015 and logit models to evaluate the likelihoods of dividend payment and share repurchase between dual-class firms and single-class firms.

The results show that dual-class firms are more likely than the matched sample of single-class firms to pay dividends in both share classes. Dual-class firms, however, are more likely to repurchase their superior shares than single-class firms and their inferior shares.

The results suggest that dual-class firms do not use corporate payouts to either mitigate agency problems or maintain the private benefits of control. Instead, dual-class firms use dividend payments to mitigate agency problems while using repurchases of superior shares to maintain the private benefits of control, which supports the agency payout hypothesis.

This paper highlights the differences between dividend payments and share repurchases as forms of corporate payouts and suggests that firms may choose a particular form for a particular purpose.

This paper provides the first piece of empirical evidence on the corporate payouts of dual-class firms separating their superior voting shares and inferior voting shares.

We investigate the empirical characteristics of firms resuming cash dividends to determine if dividend resumption is most like dividend initiation, a large dividend increase, or a completely unique event. Firms that resume dividends earn considerably larger returns than firms initiating or increasing dividends, both before and after the announcement. Dividend‐resuming firms exhibit changes in profits similar to firms increasing dividends, but the risk change following dividend resumption is more like that reported by studies of dividend initiation. These findings are unaffected by the length of time it takes firms to resume paying cash dividends, or whether the firm also declares a stock split and/or stock dividend during the period surrounding the resumption announcement. We conclude that dividend resumption is sufficiently unlike other dividend events to be regarded and studied as its own unique event.