Has the ECB’s Monetary Policy Prompted Companies to Invest or Pay Dividends?

Abstract

Institute of Applied Economics (IREA) in Barcelona was founded in 2005, as a research institute in applied economics. Three consolidated research groups make up the institute: AQR, RISK and GiM, and a large number of members are involved in the Institute. IREA focuses on four priority lines of investigation: (i) the quantitative study of regional and urban economic activity and analysis of regional and local economic policies, (ii) study of public economic activity in markets, particularly in the fields of empirical evaluation of privatization, the regulation and competition in the markets of public services using state of industrial economy, (iii) risk analysis in finance and insurance, and (iv) the development of micro and macro econometrics applied for the analysis of economic activity, particularly for quantitative evaluation of public policies. IREA Working Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. For that reason, IREA Working Papers may not be reproduced or distributed without the written consent of the author. A revised version may be available directly from the author. Any opinions expressed here are those of the author(s) and not those of IREA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions.

Dividend Policy and the COVID-19 Crisis

“…Second, our research complements the existing literature on repurchases (e.g., Grullon and Michaely, 2002;Almeida, Fos, and Kronlund, 2016;Floyd, Li, and Skinner, 2015) by showing that during COVID-19 crisis firms that spend most on repurchases report lowest current earnings and are expected to have lowest earnings in the future. Third, we add to a broad strand of research on corporate dividend behavior (e.g., Grennan, 2019;Cohen, Gómez-Puig, and Sosvilla-Rivero 2019;Qiao, Chen, and Hung, 2018;Ma and Wohar, 2014;DeAngelo, DeAngelo, and Skinner, 2004;Brav, Harvey, and Michaely, 2005). Finally, we extend a nascent literature on the effect of COVID-19 on publicly listed corporations (e.g., Fahlenbrach, Rageth, and Stulz, 2020;Agca, Birge, Wang, and Wu, 2020) in an attempt to shed additional light on dividend policy decision, one of the most puzzling phenomenon in corporate finance.…”

The ECB's conundrum and 21st century monetary policy: How European monetary policy can be green, social and democratic

“…Companies have used low interest rates to invest, but also to buy their own shares and pay dividends. 16 By driving up the price of financial assets and real estate, Europe' s asset owners have been the biggest beneficiaries of these programmes. 17 Exactly how much employment and economic growth the ECB' s programmes have in fact created remains contested.…”