Dividend policy and corporate investment under information shocks

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dc.contributor.author Harakeh, Mostafa
dc.date.accessioned 2020-06-23T10:58:25Z
dc.date.available 2020-06-23T10:58:25Z
dc.date.copyright 2020 en_US
dc.date.issued 2020-06-23
dc.identifier.issn 1042-4431 en_US
dc.identifier.uri http://hdl.handle.net/10725/11915 en_US
dc.description.abstract 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. en_US
dc.language.iso en en_US
dc.title Dividend policy and corporate investment under information shocks en_US
dc.type Article en_US
dc.description.version Published en_US
dc.author.school SOB en_US
dc.author.idnumber 200701866 en_US
dc.author.department Finance And Accounting en_US
dc.description.embargo N/A en_US
dc.relation.journal Journal of International Financial Markets, Institutions and Money en_US
dc.journal.volume 65 en_US
dc.article.pages 101184 en_US
dc.keywords Information shocks en_US
dc.keywords Information asymmetry en_US
dc.keywords Dividend policy en_US
dc.keywords Corporate investment en_US
dc.keywords Firm value en_US
dc.identifier.doi https://doi.org/10.1016/j.intfin.2020.101184 en_US
dc.identifier.ctation Harakeh, M. (2020). Dividend policy and corporate investment under information shocks. Journal of International Financial Markets, Institutions and Money, 65, 101184. en_US
dc.author.email mostafa.harakeh@lau.edu.lb en_US
dc.identifier.tou http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php en_US
dc.identifier.url https://www.sciencedirect.com/science/article/pii/S1042443120300688 en_US
dc.orcid.id https://orcid.org/0000-0003-3294-4391 en_US
dc.author.affiliation Lebanese American University en_US

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