Date of Award

Summer 2015

Document Type


Degree Name

Doctor of Philosophy (PhD)


Business Administration-Finance

Committee Director

John A. Doukas

Committee Member

Mohammad Najand

Committee Member

David D. Selover


This dissertation considers paying earnings out as dividends a conservative policy as opposed to investing earnings in to value-increasing projects. Based on this view, this dissertation explores the effect of chief executive officers’ (CEO) risk preferences on dividend policy, market’s reaction to dividend policy changes, and the effect of dividend policy on firm financial distress. The first chapter hypothesizes that risk seeking CEOs will be less likely to pay dividends compared to conservative CEOs. The second chapter hypothesizes that when the market sentiment is high (i.e., when investors are willing to take risk) firms that omit dividends should outperform the firms that initiate dividends. The third chapter predicts non-dividend-paying firms to be more likely to be in financial distress compared to dividend paying firms. Results support these hypotheses.


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