Review of Quantitative Finance and Accounting

, Volume 53, Issue 4, pp 1165–1193 | Cite as

The US financial crisis and corporate dividend reactions: for better or for worse?

  • Jitka HilliardEmail author
  • John S. JaheraJr.
  • Haoran Zhang
Original Research


We examine how changes in dividend policy in 2008 as the financial crisis was unfolding influenced firm risk-adjusted returns in the following years. Our sample consists of NYSE- and NASDAQ-traded firms that paid dividends in 2007. We divide these firms into four groups based on their dividend policy in 2008. We find that firms that decreased or eliminated dividends in 2008 had higher risk-adjusted returns in 2009. The higher risk-adjusted return is consistent with the better corporate governance in 2007. This finding suggests that the firms that quickly reacted to the deteriorating economic conditions by cutting dividends and preserving cash were able to better weather the coming financial crisis.


Dividend policy Financial crises Corporate decision making Financial flexibility 

JEL Classification

G32 G35 


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Finance, Raymond J. Harbert College of BusinessAuburn UniversityAuburnUSA
  2. 2.Department of Finance, Raymond J. Harbert College of BusinessAuburn UniversityAuburnUSA
  3. 3.Department of Finance, Raymond J. Harbert College of BusinessAuburn UniversityAuburnUSA

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