- مبلغ: ۸۶,۰۰۰ تومان
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This study documents the fact that large dividend increases are followed by a significant increase in leverage, consistent with management increasing the dividend to use up excess debt capacity. However, the leverage increase is not captured by a standard partial adjustment model of leverage. Nor does it reflect variables known to be related to dividend increases, such as firm maturity, investment, and risk. Instead, the dividend increase signals a complex change in the way firms adjust to their leverage target, but it does not signal a change in the target.
Firms increasing dividends by a large amount subsequently increase leverage. On average, this is equal to the leverage deficit at the time of the dividend increase, but the adjustment towards the target leverage is not captured by a standard partial adjustment model. Instead, these firms display a much more convex response to financing deficits, which raises their average leverage increase. The behavior is not explained by a moving leverage target, and is consistent with the dividend increase signalling the intention to increase leverage back to the target. The results are robust to many alternative specifications, including augmenting the Kayhan-Titman model of empirical leverage behavior with variables known to be related to dividend increases. The signal about the discretionary change in future leverage policy given by a large dividend increase appears to be incremental to signals about other firm characteristics. In contrast, large dividend decreases also signal an increase in leverage but not one that discretionary.