Dividend_Smoothing_and_CRAs_AM.pdf (296.72 kB)
Dividend smoothing and credit rating changes
journal contribution
posted on 2020-03-16, 11:37 authored by Panagiotis Asimakopoulos, Stylianos Asimakopoulos, Aichen ZhangThis paper examines the impact of credit rating changes on firms' dividend smoothing behavior, considering for the first time the"big three" credit rating agencies (Standard and Poor's, Fitch and Moody's). Using a hand collected sample of credit rating
changes for firms listed at the S&P500 that are involved in dividend payments, we
implement the traditional Lintner's (1956) model and we initially verify the fact that
firms smooth their dividend payments. Then we consider the effect of credit rating
changes on smoothing behavior and we show the presence of an asymmetric impact
on credit rating changes to dividend smoothing behavior. In particular, on average, a
credit rating downgrade among any of the three credit rating agencies forces firms to
engage in less smoothing, whereas a credit rating upgrade has only a marginal positive
effect on dividend smoothing. Finally, our key results remain valid for firms with high
level of financial pressure and under various robustness checks.
History
School
- Business and Economics
Department
- Business
Published in
The European Journal of FinanceVolume
27Issue
1-2Pages
62 - 85Publisher
Taylor and FrancisVersion
- AM (Accepted Manuscript)
Rights holder
© Taylor and FrancisPublisher statement
This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 13 Mar 2020, available online: https://doi.org/10.1080/1351847x.2020.1739101Acceptance date
2020-02-25Publication date
2020-03-13Copyright date
2020ISSN
1351-847XeISSN
1466-4364Publisher version
Language
- en
Depositor
Dr Panagiotis Asimakopoulos Deposit date: 13 March 2020Usage metrics
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