Did dividend policy change during the financial crisis?

Purpose – The purpose of this paper is to investigate whether corporate dividend policy changed during the financial crisis. Design/methodology/approach – For this study, a life-cycle model is used to predict the probability that a firm pays a dividend. The data sample for this research follows that of Fama and French and of DeAngelo et al., for the time period of 2006-2009. The panel logistic regression analysis considers the firm cluster effects and the autoregressive correlation of the firm clusters. Findings – This study shows evidence that the probability that a firm paid a dividend declined in 2008 and 2009, even after taking the firm's financial condition into account. Furthermore, the analysis also shows that dividend policy did shift during the financial crisis. Originality/value – The results of this study show that dividend policy did shift during the financial crisis. The research provides evidence that firms placed additional emphasis on financial viability after the financial crisis.