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Article
Publication date: 24 December 2024

Jillian Alderman, Joetta Forsyth, Charla Griffy-Brown and Richard Walton

This study explores the relationship between US public firms’ dividend policies and CEO selection. Specifically, we examine the association between successor CEOs’ prior…

6

Abstract

Purpose

This study explores the relationship between US public firms’ dividend policies and CEO selection. Specifically, we examine the association between successor CEOs’ prior employment and firms’ payout policies around CEO turnover events.

Design/methodology/approach

Using Execucomp, we identify a sample of 1,021 S&P 1500 firms with CEO turnover events occurring from 2010 to 2016. We categorize successor CEOs by their prior position as a public insider (hired internally from the public firm), public outsider (hired from a different public firm) or private outsider (hired from a private firm). We investigate dividend policies around CEO turnovers using differences-in-means and probit analyses.

Findings

Firms that hired private CEOs were 11.0% less likely to have paid a dividend in the year prior to the CEO turnover. However, those firms that had paid a dividend in the prior year were 5.4% more likely to subsequently drop their dividend. This finding supports a distinct effect that is related to the successor CEOs’ prior experience managing private firms, rather than an “outsider” effect: payout policies of firms that hired public outsiders were no different from those that hired public insiders.

Originality/value

We show that public firms that hire private CEOs tend to have dividend policies similar to those of private firms. This evidence suggests that human capital developed at private firms is applied when CEOs transfer to public firms. We show that outsiders from public firms behave differently from outsiders from private firms, and we are the first to measure the frequency of each kind of CEO successor: public insiders, public outsiders and private outsiders. These findings suggest a method to indirectly study private firms using more readily available data from public firms led by private CEOs.

Details

Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 2 November 2015

Peggy Crawford and Joetta Forsyth

The purpose of this paper is to examine whether the underserved area requirements for Fannie Mae and Freddie Mac (the government-sponsored enterprises [GSEs]) and the community…

171

Abstract

Purpose

The purpose of this paper is to examine whether the underserved area requirements for Fannie Mae and Freddie Mac (the government-sponsored enterprises [GSEs]) and the community needs requirements of the Community Reinvestment Act (CRA) contributed to the house price run-up in the USA.

Design/methodology/approach

This paper predicts the incidence of “Rebounds”, which indicate that a mortgage had been previously denied, to provide evidence on whether certain regulations caused excessively risky mortgage originations. As a different lender rejected the loan given the interest rate that they were willing to charge and information on the borrower, a higher incidence of Rebounds provides evidence that lenders were more frequently disagreeing about loans. This can indicate differences in regulatory pressure or oversight across lenders.

Findings

This paper provides evidence that the GSEs were purchasing fewer Rebounds directly from lenders. However, evidence suggests that indirectly, the securitization market served as a conduit for Rebounds to the GSEs that needed to satisfy regulatory underserved area requirements. The necessity of complying with the CRA was found to increase Rebounds. Among regulators, the Federal Reserve was found to have been particularly associated with Rebounds.

Originality/value

The paper’s contribution comes from linking Rebounds to legislative and regulatory influences. This contributes to the literature on excess credit and fraud, as well as the effect of underserved area requirements and the CRA. Also, this paper adds a new dimension to the literature on securitization, by showing the influence of regulation on the securitization of risky mortgages.

Details

Journal of Financial Economic Policy, vol. 7 no. 4
Type: Research Article
ISSN: 1757-6385

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Article
Publication date: 1 May 1975

A HICCUP in the Library Association's plans for the new Record may be presumed from the appearance in late March of a ‘re‐advertisement’ for the post of Editor, coupled with the…

16

Abstract

A HICCUP in the Library Association's plans for the new Record may be presumed from the appearance in late March of a ‘re‐advertisement’ for the post of Editor, coupled with the advice that former applicants need not re‐apply (so much for my hopes of a sheltered haven when the economic deluge arrives!).

Details

New Library World, vol. 76 no. 5
Type: Research Article
ISSN: 0307-4803

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