Dividend Initiations and Asymmetric Information: A Hazard Model

Posted: 19 Jul 2003

See all articles by Sanjay Deshmukh

Sanjay Deshmukh

DePaul University - Department of Finance

Abstract

This paper investigates the dynamics of dividend policy using a hazard model. Specifically, the paper examines dividend initiations for a sample of firms that went public between 1990 and 1997. These dividend initiations are examined in the context of an alternative explanation based on the pecking order theory. The results indicate that the probability or the hazard rate of a dividend initiation is negatively related to both the level of asymmetric information and growth opportunities and positively related to the level of cash flow. These results are consistent with a pecking order explanation but inconsistent with a signaling explanation.

Suggested Citation

Deshmukh, Sanjay, Dividend Initiations and Asymmetric Information: A Hazard Model. Available at SSRN: https://ssrn.com/abstract=395901

Sanjay Deshmukh (Contact Author)

DePaul University - Department of Finance ( email )

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States
312-362-8472 (Phone)
312-362-6566 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,041
PlumX Metrics