Corporate Bond Price Reactions to Dividend Changes

@inproceedings{Wei2017CorporateBP,
  title={Corporate Bond Price Reactions to Dividend Changes},
  author={Xiaoting Wei and Cameron Truong and Viet Thi Minh Do},
  year={2017}
}
Employing an event study approach, we examine 5,574 bond return reactions to unexpected quarterly dividend change announcements in the U.S. corporate bond market over the period 2002–2014. Overall, we report a significant bond price reaction in the same direction as dividend changes, which supports the hypothesis that dividend changes signal future firm performance. We also find that the bond return reaction is more pronounced if the dividends are reduced than if they are increased. We document… CONTINUE READING

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