A Study of the Abnormal Dividend Decisions of New Zealand Firms during COVID-19

Simple item page
dc.citation.issue10
dc.citation.volume16
dc.contributor.authorQiu M
dc.contributor.authorLi X-M
dc.date.accessioned2023-11-20T19:35:48Z
dc.date.accessioned2024-07-25T06:51:22Z
dc.date.available2023-11-20T19:35:48Z
dc.date.available2024-07-25T06:51:22Z
dc.date.issued2023-10-01
dc.description.abstractWe investigated the stock return risk associated with the various types of dividend decisions announced by New Zealand firms during the COVID-19 pandemic in 2020. The sample includes a group of firms that initially announced cash dividends but a number of days later made announcements cancelling their payments. Using multinomial logistic regression analysis, we found that higher pre-pandemic payout policy significantly increased the likelihood of a cancellation, an omission or an increase decision. Higher growth and higher profitability reduced the probability of an omission and a reduction decision, respectively. Moreover, higher stock return volatility increased the likelihood of an omission, a reduction or an increase decision. Further event study analysis revealed that investors reacted more feverishly to the announcements of cancellation decisions than any other types of dividend decisions. Moreover, we report strong evidence of negative abnormal returns around the cancellation announcements followed by positive post-announcement price reversals, a pattern that is not observed for the omission announcements. This paper contributes to the literature by studying a cancellation sample and reveals, for the first time, significant shareholder risk associated with cancellation decisions, which was not observed for omission decisions. We alert managers to carefully weigh the costs and benefits of breaking a promise of dividend payout.
dc.identifier.citationQiu M, Li XM. (2023). A Study of the Abnormal Dividend Decisions of New Zealand Firms during COVID-19. Journal of Risk and Financial Management. 16. 10.
dc.identifier.doi10.3390/jrfm16100418
dc.identifier.eissn1911-8074
dc.identifier.elements-typejournal-article
dc.identifier.urihttps://mro.massey.ac.nz/handle/10179/71027
dc.publisherMDPI (Basel, Switzerland)
dc.relation.isPartOfJournal of Risk and Financial Management
dc.relation.urihttps://doi.org/10.3390/jrfm16100418
dc.rights(c) 2023 The Author/s
dc.rightsCC BY
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.titleA Study of the Abnormal Dividend Decisions of New Zealand Firms during COVID-19
dc.typeJournal article
pubs.elements-id484281
pubs.organisational-groupMassey Business School
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
jrfm-16-00418.pdf
Size:
644.04 KB
Format:
Adobe Portable Document Format
Description:
Download
Collections
Journal Articles