Document Type



Business Administration

First Advisor's Name

Ali M. Parhizgari

First Advisor's Committee Title

Committee Chair

Second Advisor's Name

Arun J. Prakash

Third Advisor's Name

Chun-Hao Chang

Fourth Advisor's Name

Gauri Ghai


dividends, determinants for dividend payment, financial crisis, American Depository Receipts

Date of Defense



The number of dividend paying firms has been on the decline since the popularity of stock repurchases in the 1980s, and the recent financial crisis has brought about a wave of dividend reductions and omissions. This dissertation examined the U.S. firms and American Depository Receipts that are listed on the U.S. equity exchanges according to their dividend paying history in the previous twelve quarters. While accounting for the state of the economy, the firm’s size, profitability, earned equity, and growth opportunities, it determines whether or not the firm will pay a dividend in the next quarter. It also examined the likelihood of a dividend change. Further, returns of firms were examined according to their dividend paying history and the state of the economy using the Fama-French three-factor model.

Using forward, backward, and step-wise selection logistic regressions, the results show that firms with a history of regular and uninterrupted dividend payments are likely to continue to pay dividends, while firms that do not have a history of regular dividend payments are not likely to begin to pay dividends or continue to do so. The results of a set of generalized polytomous logistic regressions imply that dividend paying firms are more likely to reduce dividend payments during economic expansions, as opposed to recessions. Also the analysis of returns using the Fama-French three factor model reveals that dividend paying firms are earning significant abnormal positive returns.

As a special case, a similar analysis of dividend payment and dividend change was applied to American Depository Receipts that trade on the NYSE, NASDAQ, and AMEX exchanges and are issued by the Bank of New York Mellon. Returns of American Depository Receipts were examined using the Fama-French two-factor model for international firms. The results of the generalized polytomous logistic regression analyses indicate that dividend paying status and economic conditions are also important for dividend level change of American Depository Receipts, and Fama-French two-factor regressions alone do not adequately explain returns for these securities.





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