An Examination of the Free Cash Flow and Information/Signaling Hypotheses Using Unexpected Dividend Changes Inferred from Option and Stock Prices: The Case of Regular Dividend Increases
2011 ◽
Vol 14
(03)
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pp. 563-600
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Keyword(s):
High Q
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This paper measures unexpected dividend changes in testing the free cash flow and information/signaling hypotheses using the Bar–Yosef/Sarig method. The empirical findings reveal the following: (i) The association between announcement period abnormal returns and the cash level is significantly positive for low q firms; (ii) The positive association between announcement period, abnormal returns, and the cash level is stronger in low q than in high q firms for most regressions; (iii) Low q firms reduce their capital and research and development (R&D) expenditures during the four fiscal years following dividend increase announcements. Our results are consistent with the free cash flow hypothesis.
2004 ◽
Vol 07
(03)
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pp. 335-354
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2016 ◽
Vol 52
(4)
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pp. 543-558
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1993 ◽
Vol 3
(3)
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pp. 353-365
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1998 ◽
Vol 01
(03)
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pp. 355-367
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Keyword(s):
2018 ◽
Vol 11
(2)
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pp. 7-23
Keyword(s):
Keyword(s):
1997 ◽
Vol 12
(2)
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pp. 101-124
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