Work

The market's perception of the information conveyed by dividend announcements

Year: 1999

Type: article

Abstract: This paper tests whether the market perceives announced dividend changes to reflect information about current and/or future cash flows. The empirical relationship between dividend changes and earnings changes is inconclusive. Furthermore, there is no empirical evidence regarding the market's perception of managers' intentions in changing the level of dividends. By analyzing the price reaction of scores to an announced dividend change, we are able to isolate the effects of a short-term change and a long-term change. Our findings indicate that the market perceives dividend changes to reflect a long-term change in earnings.

Source: Journal of Multinational Financial Management

DOI: 10.1016/s1042-444x(98)00049-8

Author: Linda Canina

Institution: Cornell University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,080

Funders: Boston College, Brown University