Abstract
This paper examines a firm's dividend reduction timing relative to other dividend reductions in the same industry. A model is proposed where the timing of dividend cuts signals true firm value. It is suggested that during periods of lower availability of external financing, firms with greater investment opportunities are among the first to make necessary dividend reductions to take advantage of such opportunities. When external financing is more available, firms with superior investment opportunities are able to access capital markets in lieu of dividend-reducing internal financing, indicating relatively higher firm values for earlier dividend reductions during periods of costly external financing, and significantly lower relative firm values for early reductions when financing is more easily obtained.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
