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Full-Text Articles in Finance and Financial Management
Litigation Risk Management Through Corporate Payout Policy, Matteo Arena, Brandon Julio
Litigation Risk Management Through Corporate Payout Policy, Matteo Arena, Brandon Julio
Finance Faculty Research and Publications
Firms modify their payout policy in anticipation of future litigation costs. We examine a comprehensive sample of U.S. corporate lawsuits and find that firms facing significant litigation risk pay lower dividends, and in some cases omit dividends while distributing more cash through share repurchases. Litigation risk changes the distribution of payouts but not the total payout yield as the increase in share repurchases offsets the decrease in dividends. Cash-poor firms cut share repurchases when settlement costs are incurred. The results suggest that firms at a higher risk of litigation increase their payout flexibility.
Accelerated Share Repurchases, Leonce Bargeron, Manoj Kulchania, Shawn Thomas
Accelerated Share Repurchases, Leonce Bargeron, Manoj Kulchania, Shawn Thomas
Finance Faculty Research and Publications
Accelerated share repurchases (ASRs) are credible commitments by firms to repurchase shares immediately. Including an ASR in a repurchase program reduces the flexibility that firms have to alter an announced program in response to subsequent changes in the price and liquidity of its shares, unexpected shocks to cash flow and/or investment, etc. Thus, we investigate whether firms’ decisions to include ASRs in their repurchase programs are associated with factors expected to influence the costs of lost flexibility and the benefits of enhanced credibility and immediacy. We find robust evidence consistent with the costs of lost flexibility and the benefits of …