The impact of short selling on dividend smoothing

Bill B. Francis, Gilna Samuel, Qiang Wu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

4 Citations (Scopus)


We examine the impact of stock-price formation process on firms’ dividend smoothing using Regulation SHO. We find that pilot firms are more likely to increase dividends and less likely to omit them during the pilot program; however, they are more likely to decrease dividends after the program ends. These firms also smooth less and have higher adjustment speeds. Our findings are more pronounced for firms with higher information asymmetry, stronger financials, and weaker governance. In general, this study shows that financial markets tend to have a significant and long-lasting impact on dividend smoothing policy.

Original languageEnglish
Article number101117
JournalJournal of Financial Stability
Publication statusPublished - Apr 2023


  • Payout policy
  • Regulation SHO
  • Short selling
  • Signaling
  • Smoothing

ASJC Scopus subject areas

  • Finance
  • General Economics,Econometrics and Finance


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