Dividend policy and corporate investment under information shocks
This study exploits the mandatory adoption of International Financial Reporting Standards (IFRS) as an exogenous shock to the corporate information environment to examine how the constraining effect of dividend policy on corporate investment changes under lower levels of information asymmetry. To id...
محفوظ في:
| المؤلف الرئيسي: | |
|---|---|
| التنسيق: | article |
| منشور في: |
2020
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| الوصول للمادة أونلاين: | http://hdl.handle.net/10725/11915 https://doi.org/10.1016/j.intfin.2020.101184 http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php https://www.sciencedirect.com/science/article/pii/S1042443120300688 |
| الوسوم: |
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| _version_ | 1864513489628823552 |
|---|---|
| author | Harakeh, Mostafa |
| author_facet | Harakeh, Mostafa |
| author_role | author |
| dc.creator.none.fl_str_mv | Harakeh, Mostafa |
| dc.date.none.fl_str_mv | 2020-06-23T10:58:25Z 2020-06-23T10:58:25Z 2020 2020-06-23 |
| dc.identifier.none.fl_str_mv | 1042-4431 http://hdl.handle.net/10725/11915 https://doi.org/10.1016/j.intfin.2020.101184 Harakeh, M. (2020). Dividend policy and corporate investment under information shocks. Journal of International Financial Markets, Institutions and Money, 65, 101184. http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php https://www.sciencedirect.com/science/article/pii/S1042443120300688 |
| dc.language.none.fl_str_mv | en |
| dc.relation.none.fl_str_mv | Journal of International Financial Markets, Institutions and Money |
| dc.rights.*.fl_str_mv | info:eu-repo/semantics/openAccess |
| dc.title.none.fl_str_mv | Dividend policy and corporate investment under information shocks |
| dc.type.none.fl_str_mv | Article info:eu-repo/semantics/publishedVersion info:eu-repo/semantics/article |
| description | This study exploits the mandatory adoption of International Financial Reporting Standards (IFRS) as an exogenous shock to the corporate information environment to examine how the constraining effect of dividend policy on corporate investment changes under lower levels of information asymmetry. To identify the treatment effect of the information shock, I employ a difference-in-differences research design using an international sample of 25 countries that spans the period 2000–2010. I first show that the information shock mitigates information asymmetry. Then, I find that the constraining effect of dividends on investments declines following the information shock, especially among firms with higher levels of information asymmetry ex-ante. Finally, I show that less constrained investments contribute to maximizing firm value. Overall, I show how reducing information asymmetry mitigates agency conflicts over dividend policy and thereby decreases the probability of forgoing valuable investments to pay dividends, which is found to maximize shareholders’ wealth. |
| eu_rights_str_mv | openAccess |
| format | article |
| id | LAURepo_72d6443aa5bb595084a5f034125c2f87 |
| identifier_str_mv | 1042-4431 Harakeh, M. (2020). Dividend policy and corporate investment under information shocks. Journal of International Financial Markets, Institutions and Money, 65, 101184. |
| language_invalid_str_mv | en |
| network_acronym_str | LAURepo |
| network_name_str | Lebanese American University repository |
| oai_identifier_str | oai:laur.lau.edu.lb:10725/11915 |
| publishDate | 2020 |
| repository.mail.fl_str_mv | |
| repository.name.fl_str_mv | |
| repository_id_str | |
| spelling | Dividend policy and corporate investment under information shocksHarakeh, MostafaThis study exploits the mandatory adoption of International Financial Reporting Standards (IFRS) as an exogenous shock to the corporate information environment to examine how the constraining effect of dividend policy on corporate investment changes under lower levels of information asymmetry. To identify the treatment effect of the information shock, I employ a difference-in-differences research design using an international sample of 25 countries that spans the period 2000–2010. I first show that the information shock mitigates information asymmetry. Then, I find that the constraining effect of dividends on investments declines following the information shock, especially among firms with higher levels of information asymmetry ex-ante. Finally, I show that less constrained investments contribute to maximizing firm value. Overall, I show how reducing information asymmetry mitigates agency conflicts over dividend policy and thereby decreases the probability of forgoing valuable investments to pay dividends, which is found to maximize shareholders’ wealth.PublishedN/A2020-06-23T10:58:25Z2020-06-23T10:58:25Z20202020-06-23Articleinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/article1042-4431http://hdl.handle.net/10725/11915https://doi.org/10.1016/j.intfin.2020.101184Harakeh, M. (2020). Dividend policy and corporate investment under information shocks. Journal of International Financial Markets, Institutions and Money, 65, 101184.http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.phphttps://www.sciencedirect.com/science/article/pii/S1042443120300688enJournal of International Financial Markets, Institutions and Moneyinfo:eu-repo/semantics/openAccessoai:laur.lau.edu.lb:10725/119152021-03-19T09:10:18Z |
| spellingShingle | Dividend policy and corporate investment under information shocks Harakeh, Mostafa |
| status_str | publishedVersion |
| title | Dividend policy and corporate investment under information shocks |
| title_full | Dividend policy and corporate investment under information shocks |
| title_fullStr | Dividend policy and corporate investment under information shocks |
| title_full_unstemmed | Dividend policy and corporate investment under information shocks |
| title_short | Dividend policy and corporate investment under information shocks |
| title_sort | Dividend policy and corporate investment under information shocks |
| url | http://hdl.handle.net/10725/11915 https://doi.org/10.1016/j.intfin.2020.101184 http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php https://www.sciencedirect.com/science/article/pii/S1042443120300688 |