This paper investigates the impact of the Insolvency and Bankruptcy Code (IBC) on the dividend policy of financially distressed Indian firms. Utilizing a dataset of 33,820 firm-year observations from 2003 to 2023, we employ a difference-in-difference framework to examine how the introduction of IBC influences dividend payouts. Our findings reveal that distressed firms pay more dividends post IBC than non distressed firms, primarily benefiting underlevered distressed firms by enhancing their access to credit. Conversely, overlevered distressed firms experience a reduction in dividend payouts post-IBC. Additionally, the study highlights that standalone distressed firms are more likely to increase dividend payouts post-IBC compared to their business group-affiliated counterparts, due to the latter's access to internal capital markets. These insights contribute to the understanding of how bankruptcy reforms impact the financial strategies of distressed firms and provide valuable implications for policymakers and stakeholders in emerging economies.

中文翻译：

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破产法下的股息政策调整：来自陷入困境的企业的见解


本文调查了《破产法》（IBC） 对陷入财务困境的印度公司的股息政策的影响。利用 2003 年至 2023 年 33,820 个公司年度观察的数据集，我们采用双重差分框架来研究 IBC 的引入如何影响股息支付。我们的研究结果显示，不良企业在 IBC 后支付的股息高于非不良企业，主要通过增加其获得信贷的机会使杠杆不足的不良企业受益。相反，过度杠杆化的不良公司在 IBC 之后的股息支付会减少。此外，该研究强调，由于后者可以进入内部资本市场，因此与商业集团附属公司相比，独立的不良公司更有可能在 IBC 后增加股息支付。这些见解有助于理解破产改革如何影响陷入困境的企业的财务战略，并为新兴经济体的政策制定者和利益相关者提供有价值的启示。