Excess corporate payouts and financial distress risk
Andriosopoulos, Dimitris and De Cesari, Amedeo and Stathopoulos, Konstantinos (2021) Excess corporate payouts and financial distress risk. European Financial Management, 27 (5). pp. 865-898. ISSN 1354-7798 (https://doi.org/10.1111/eufm.12291)
Preview |
Text.
Filename: Andriosopoulos_etal_EFM_2020_Excess_corporate_payouts_and_financial_distress_risk.pdf
Accepted Author Manuscript Download (515kB)| Preview |
Abstract
Firms that follow excessive payout policies (over-payers) are higher on the financial distress spectrum and have lower survival rates than under-payers. In addition, over-payers endure lower future sales and asset growth than under-payers and experience negative abnormal returns in the bond and stock markets. Exogenous import tariff reductions and commodity price jumps reduce the likelihood of overpayment. We interpret this as evidence consistent with financial flexibility considerations, rather than risk-shifting, explaining the decision to overpay. We also find that CEO overconfidence and catering incentives affect overpayment.
ORCID iDs
Andriosopoulos, Dimitris ORCID: https://orcid.org/0000-0003-3033-2308, De Cesari, Amedeo and Stathopoulos, Konstantinos;-
-
Item type: Article ID code: 74282 Dates: DateEvent30 November 2021Published3 January 2021Published Online11 October 2020AcceptedSubjects: Social Sciences > Finance Department: Strathclyde Business School > Accounting and Finance Depositing user: Pure Administrator Date deposited: 15 Oct 2020 14:16 Last modified: 28 Sep 2024 14:04 URI: https://strathprints.strath.ac.uk/id/eprint/74282