The Drivers of Decreases in Dividends per Share

Project Details




Douglas Britton, Srinivasan Chakravarthy, Srihari Dammalapati, Luke Grossmann





Dividend payouts are one of the two ways that stock investors are compensated for their investments in the stock market. As such, changes in dividends are extremely important to investors. Financial literature has shown that a decrease in dividend payouts on a dividend per share basis have a negative impact that is solely explainable by the decrease in expected future cash flows. Decreasing dividends is a negative signal to the market.

The ability to understand what makes up decisions to decrease dividends will help investors accurately evaluate the risk of an investment and help managers to articulate financial objectives that keep their firms from falling into this category. The goal of this project is to create a model that predicts whether dividends per share will strictly decrease or not.

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