{"title":"Dividend hibernation and future earnings: When no dividend news is good news","authors":"Jo Drienko , Bardia Khorsand","doi":"10.1016/j.jcorpfin.2023.102502","DOIUrl":null,"url":null,"abstract":"<div><p>Firms frequently enter dividend hibernation, periods during which dividends remain unchanged for consecutive quarters. We employ a dividend event framework to show that, compared to non-hibernating firms, hibernators experience higher unexpected future earnings growth for up to five years by reducing underinvestment. We construct an index of adverse selection measures and find that hibernating firms are more opaque, indicating that the information gap between insiders and outsiders widens when there is no change in dividends. Extended hibernation episodes increase the opaqueness, while dividend changes after prolonged periods of fixed dividends reduce the information gap more promptly.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"83 ","pages":"Article 102502"},"PeriodicalIF":7.2000,"publicationDate":"2023-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Corporate Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0929119923001517","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Firms frequently enter dividend hibernation, periods during which dividends remain unchanged for consecutive quarters. We employ a dividend event framework to show that, compared to non-hibernating firms, hibernators experience higher unexpected future earnings growth for up to five years by reducing underinvestment. We construct an index of adverse selection measures and find that hibernating firms are more opaque, indicating that the information gap between insiders and outsiders widens when there is no change in dividends. Extended hibernation episodes increase the opaqueness, while dividend changes after prolonged periods of fixed dividends reduce the information gap more promptly.
期刊介绍：
The Journal of Corporate Finance aims to publish high quality, original manuscripts that analyze issues related to corporate finance. Contributions can be of a theoretical, empirical, or clinical nature. Topical areas of interest include, but are not limited to: financial structure, payout policies, corporate restructuring, financial contracts, corporate governance arrangements, the economics of organizations, the influence of legal structures, and international financial management. Papers that apply asset pricing and microstructure analysis to corporate finance issues are also welcome.
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