CEO dividend protection

Zhang, Dan

doi:10.1016/j.jempfin.2017.10.005

Cited by 6 publications

(2 citation statements)

References 34 publications

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“…Aside from this (admittedly casual) observation, there are three reasons to question a causal interpretation of the association documented in the literature. First, if boards anticipate the consequences of a 1 Zhang (2018) finds that between 2000 and 2009, less than 1% of Standard & Poor's (S&P) 500 firms provide dividend protection, confirming evidence for earlier periods (Murphy (1999), Weisbenner (2000), and Cuny, Martin, and Puthenpurackal (2009)). For a discussion of the institutional reasons for lack of dividend protection, see Fenn and Liang (2001).…”

Section: Introductionmentioning

confidence: 84%

Does Option-Based Compensation Affect Payout Policy? Evidence from FAS 123R

Ferri¹,

2018

J. Financ. Quant. Anal.

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Does option-based compensation affect payout policy? To address this question, we examine the adoption of mandatory expensing of stock options. Our identification strategy exploits the fact that the reduction in option-based compensation after the accounting change varies with the firm-specific expected accounting impact. Across a battery of tests, we do not find that (accounting-driven) reductions in option-based pay cause dividends to increase or repurchases to decrease. Our results contrast with the widely held belief that option-based pay has a significant causal influence on payout policy and cast doubts on its role in the shift from dividends to repurchases.

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Section: Introductionmentioning

confidence: 84%

Does Option-Based Compensation Affect Payout Policy? Evidence from FAS 123R

Ferri¹,

2018

J. Financ. Quant. Anal.

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“…The likelihood of paying dividends is measured using a dummy variable that equals one if a firm pays dividends in a year and zero otherwise (Fama and French, 2001; DeAngelo et al ., 2006; Denis and Osobov, 2008). For our purpose, we use dividend yield, measured by a firm's annual common cash dividends divided by the firm's beginning‐of‐the‐year market value ( DIV/MV ), as the main proxy for the dividend payout amount (Sharma, 2011; Atanassov and Mandell, 2018; Zhang, 2018). Using dividend yield ( DIV/MV ) removes some concerns about the mechanical links between the endogenous and some exogenous variables that may originate if we use income as the scaler for the dividend.…”

Section: Empirical Analysismentioning

confidence: 99%

Board Connections and Dividend Policy

Farooq¹,

Azeem

Chui

et al. 2023

Abacus

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We examine the role of firm board connectedness in shaping a firm's dividend policy. We show that firms with well‐connected boards not only have a higher likelihood of paying dividends in the pooled sample of both dividend payers and non‐payers but also pay more dividends in the sample of dividend payers, compared with those with poorly connected boards. Further analysis reveals that the relation between board connectedness and dividend‐paying behaviour tends to be economically stronger in firms pre‐identified to have more severe agency conflicts, suggesting that well‐connected boards tend to use dividends to mitigate agency problems in these firms. These findings are robust to different measures of board connectedness, different dividend payout measures, alternative estimation methods, and tests that account for endogeneity.

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