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Corporate Payout Policy and Credit Risk : Evidence from Credit Default Swap Markets

We examine whether and how payout policy affects credit risk using evidence from the credit default swap (CDS) market. CDS spreads increase substantially in response to announcements of dividend cuts, especially during recessions and among firms experiencing financial distress. CDS spreads also react more strongly to permanent and less anticipated dividend cuts. The size of the CDS reaction is more pronounced for financial firms, which are inherently more opaque. In contrast, CDS spreads react weakly to dividend raises and share repurchases. The results show that the information effect of dividend changes dominates the wealth-transfer effect.

Ketersediaan

Informasi Detail

Judul Seri

MANAGEMENT SCIENCE; Vol.67 No.9 September 2021

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 5755 - 5775

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

CREDIT DEFAULT SWAPS
FINANCIAL FIRMS
DIVIDEND ANNOUNCEMENTS
INDUSTRIAL FIRMS
TROUBLED ASSET RELIEF PROGRAM

Info Detail Spesifik

https://doi.org/10.1287/mnsc.2020.3753

Pernyataan Tanggungjawab

Chengzhu Sun, Shujing Wang, Chu Zhang

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