Dividend Smoothing and Signaling Under the Impact of the Global Financial Crisis: A Comparison of US and Southeast Asian Markets

Under the impact of the global financial crisis, firms experience more external financial constraints and this is a good opportunity to investigate dividend smoothing and signaling behavior. Using data from the US market where the crisis originates and five Southeast Asian markets which are slightly affected by the crisis, we find that US firms pursue dividend smoothing model and they also follow signaling theory by increasing dividends in the post-crisis period to earn good reputation. However, Malaysia, Philippines and Indonesia following dividend smoothing model fail to pay more dividends in the post-crisis period. Thailand and Singapore increase dividend payments in the post-crisis period but they fail to pursue the dividend smoothing model significantly.