Are Dividend Changes a Sign of Firm Maturity

By Gustavo Grullon, Roni Michaely, Bhaskaran Swaminathan. 2002

1,154 citations recorded by the source corpus.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/244fed19bb72a337f3a476b01cb93f3a80a5ce57

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Citations in the corpus

Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory (2006, background): “Fama and French (2001), Grullon et al. (2002), and DeAngelo and DeAngelo (2006) all advance life-cycle explanations for dividends that rely, implicitly or explicitly, on the trade-off between the advantages (e.g., flotation cost savings) and the costs of retention (e.g., agency costs of free cash…”
Corporate Life Cycle and Cost of Equity Capital (2015, neutral): “Fama and French (2001), Grullon et al. (2002), DeAngelo et al. (2006), and Coulton and Ruddock (2011) documented that mature and profitable firms are more likely to pay dividends, while young firms with higher growth options are less likely to do so.”
Dividends as Reference Points: A Behavioral Signaling Approach (2015, background): “Another positive feature of this setup is that it builds nicely on the empirical evidence of Benartzi, Michaely, and Thaler (1997) and Grullon, Michaely, and Swaminathan (2002), who show that dividends are not useful signals of future earnings growth.”
Why Do Firms Pay Dividends? International Evidence on the Determinants of Dividend Policy (2008, methodology): “They propose a life-cycle theory that combines elements of the Jensen (1986) agency theory with evolution in the firm’s investment opportunity set of the type discussed in Fama and French (2001) and Grullon, Michaely, and Swaminathan (2002).”
Asymmetric Information and Dividend Policy (2008, positive): “This finding confirms the result in Grullon et al. (2002) and Hoberg and Prabhala (2008).”
What do dividends tell us about earnings quality? (2009, positive): “Following Lintner’s (1956) classic work, we know that managers are reluctant to increase dividends unless they believe that dividends can be sustained at the new level.”
Dividend changes and catering incentives (2006, background): “Nissim and Ziv (2001) report evidence in favor of the signaling theory, but Benartzi, Michaely, and Thaler (1997), Grullon, Michaely, and Swaminathan (2002), and Grullon, Michaely, Benartzi, and Thaler (2003) find no such evidence.”
Determinants of Corporate Dividend Policy in Jordan: An Application of the Tobit Model (2007, result): “The result also provides empirical support for the maturity hypothesis proposed by Grullon et al. (2002). That is, as firms become mature their growth opportunities tend to decline resulting in lower capital expenditure needs, and thus more cash flows are available for dividend payments.”
Accounting restatements and information risk (2010, positive): “Our approach follows that used by Grullon et al. (2002). We also estimated the equity risk premium for each firm by multiplying each factor loading from Table 2 by the factor return over the respective estimation (pre/post) periods.”
Control Structures and Payout Policy (2007, neutral): “We control for firm size which is often considered as a proxy for firm maturity and has been shown to affect dividend policy (Grullon et al., 2002).”
Financial Flexibility and Capital Structure Decision (2011, background): “Grullon et al. (2002) present a “maturity hypothesis” which suggests that a dividend increase indicates a firm’s maturity.”
Product Market Threats, Payouts, and Financial Flexibility (2012, background): “In particular, it is related to Grullon, Michaely, and Swaminathan (2002) and DeAngelo, DeAngelo, and Stulz (2006), who argue that firm maturity is a key determinant of dividends.4 Our results suggest that firm-level maturity indeed matters, but is only one of two components of maturity.”
Payout Policy in the 21st Century (2003, positive): “This evidence is consistent with the notion that firms that increase dividends do so when they become more mature and less risky (Grullon et al., 2002; Julio and Ikenberry, 2004), as well as with the bird-in-the-hand argument.”