Government grants and the impact of dividend announcements on firms’ stock price

Ichev, Riste (author)

This study empirically examines the impact of media-reported dividend an- nouncements on the stock returns of US public firms receiving a COVID-19- related one-time government grant. While COVID-19 continued devastating the economy, public firm borrowers that decided to pay out dividends while using government support, exhibited a negative Cumulative Abnormal Return (CAR) of −5.3% around the announcement day. In contrast, investors’ reac- tion to firms announcing discontinuation of dividend payments while re- ceiving COVID-19 grants, results in a much milder CAR of ≈ −1.2%. Firm size, leverage, cash/assets, ESG score, and the media coverage proxy influence significantly the returns during the period.

• Language: English
• Keywords: investments, dividends, pandemic, government grants, COVID-19, dividend announcement, investor sentiment, stock markets
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2024
• Number of pages: Str. 951-961
• Numbering: Vol. 14
• PID: 20.500.12556/RUL-169962
• UDC: 658.152
• ISSN on article: 2162-2078
• DOI: 10.4236/tel.[phone]
• COBISS.SI-ID: 199652867
• Publication date in RUL: 26.06.2025

Record is a part of a journal

• Title: Theoretical economics letters
• Shortened title: Theor. econ. lett.
• Publisher: Scienfitic Research Publishing, Inc.
• ISSN: 2162-2078
• COBISS.SI-ID: 68876803

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: investicije, dividende, pandemija

Projects

• Funder: ARIS - Slovenian Research and Innovation Agency
• Project number: P5-0161
• Name: Izzivi vlagateljev, podjetij, finančnih institucij in države v negotovem evropskem gospodarskem okolju