Eyad Alhudhaif

Eyad Alhudhaif

Assistant Professor of Finance

Working Papers

Corporate Payouts Under Economic Policy Uncertainty

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Using a sample of all public firms in the U.S. between 1985 and 2019, I examine whether general economic policy uncertainty, monetary policy uncertainty, and fiscal policy uncertainty have heterogeneous effects on corporate payouts; mainly dividends and open market share repurchases. I find a consistent negative relation between share repurchases and EPU, and the effect seems to be more pronounced under fiscal policy uncertainties as appose to monetary policy uncertainties. Finally, the negative relation is mainly driven by capital constrained firms. Taken together, the findings suggest that withholding funds is more valuable than dispersing cash to investors to mitigate agency costs of free cash flows, at least in the United States. This empirical test relies on the economic policy uncertainty (EPU) index and its subcategories developed by Baker et al., 2016.

Recommended citation: Alhudhaif, Eyad. (2016). "Corporate Payouts Under Economic Policy Uncertainty". Working Paper. https://ieyada.github.io/files/Payout_epu.pdf

The Asymmetry Between Growth Opportunities and Debt Maturity Structure

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Using the recent public health pandemic (COVID-19) as a laboratory experiment, I find evidence of an asymmetrical relation between a firm’s debt maturity structure choice and its growth opportunities. Firms with high pre-pandemic exposure to growth-inducing factors obtained from 10-K filings have increased debt maturity and are more likely to exercise a call on their callable bonds, while firms with high pre-pandemic exposure to growth-reducing factors are null in taking any actions to adjust their debt maturity structure. Further, the increase in debt maturity following exogenous changes in growth opportunities suggests a unique type of change in firms’ growth options following the recent pandemic, supporting the arguments proposed by Diamond and He (2014) and Childs, Mauer, and Ott (2005).

Recommended citation: Alhudhaif, Eyad. (2021). "The Asymmetry Between Growth Opportunities and Debt Maturity Structure". Working Paper. https://dx.doi.org/10.2139/ssrn.3906487

Publications