Are investors desires for dividend increases stronger than dividend initiation

2020 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Liliana Inggrit Wijaya ◽  
I. Made Narsa ◽  
Andry Irwanto ◽  
Rahmat Setiawan
Keyword(s):  
Dividend Increases

Information Content of Dividends: Evidence from Istanbul

2010 ◽  
Vol 3 (3) ◽  
pp. 126 ◽  
Author(s):  
Ayse Altiok-Yilmaz ◽  
Elif Akben Selcuk
Keyword(s):  
Information Content ◽  
Event Study ◽  
Stock Exchange ◽  
Information Leakage ◽  
Istanbul Stock Exchange ◽  
Event Information ◽  
Study Methodology ◽  
Dividend Increases ◽  
Signaling Hypothesis ◽  
Event Study Methodology

This study investigates the market reaction to dividend change announcements at the Istanbul Stock Exchange. A sample of 184 announcements made by 46 companies during the period 2005 to 2008 is analyzed by using the event study methodology. The results suggest that the market reacts positively to dividend increases, negatively to dividend decreases and does not react when dividends are not changed, consistent with the signaling hypothesis. Also, the results show pre-event information leakage for the decreasing dividends sample.

scholarly journals Capital Market Response to the Change in the Dividend Policy: The Case of Slovenian Stock Market

2016 ◽  
Vol 8 (1) ◽  
pp. 42 ◽  
Author(s):  
Matjaž Mikluš ◽  
Zan Jan Oplotnik
Keyword(s):  
Stock Market ◽  
Capital Market ◽  
Stock Price ◽  
Dividend Policy ◽  
Market Response ◽  
Asymmetry Of Information ◽  
Price Increases ◽  
Signalling Theory ◽  
Stock Price Reaction ◽  
Dividend Increases

<p>The three basic dividend policy theories have a completely different approach to describing the influence of dividends payment on stock price, and on the value of the company. Numerous studies conducted in this area have led to almost as many derived dividend policy theories, which are more or less related to the basic three. As one of them Wang, Manry &amp; Wandler (2011) specify the dividend signalling theory, which is based particularly on the assumption of the asymmetry of information between the company management and the shareholders and in recent decades it has been studied by many authors, who mostly concluded that dividend increase has a positive stock price reaction, and vice versa, that dividend decrease results in stock price falls (as cited in Ross, 1977; Leland and Pyle, 1977; Grinblatt et al., 1984; Baker and Phillips, 1993; Rankine and Stice, 1997; Bechmann and Raaballe, 2007). For the purposes of our analysis we adopted the methodology of foreign researches and checked the existence of the dividend signalling theory in the Slovenian stock market. The Slovenian stock market is one of developing markets, and is particularly specific due to its small size and illiquidity. Our research resulted in no statistically significant stock price increases from company dividend increases, whereby we have refuted the research hypothesis and, consequently, the dividend signalling theory in the Slovenian stock market in the described period.</p>

Dividend Changes as Predictors of Future Profitability

2021 ◽  
Vol 15 (1) ◽  
Author(s):  
Fakhrul Hasan
Keyword(s):  
Information Content ◽  
Stock Prices ◽  
Special Interest ◽  
Dividend Policy ◽  
Future Earnings ◽  
New Information ◽  
Dividend Increases ◽  
Using Data ◽  
The Uk ◽  
Dividend Tax

This study investigates “the information content of dividends hypothesis” using data on UK firms from 1990-2015. Dividends act as an important conveyor of information. Dividend changes may trigger changes in stock prices because they may convey new information about the firm’s future earnings and profitability. Why do companies pay dividends (or analogously why are stockholders interested in receiving dividends), given that it is well known that dividends are often taxed heavily? This question is of special interest in the UK, where the dividend tax is higher than the capital gain tax. Previous research has used a number of dividend policy theories to explain the dividend policy puzzle. We carry out several estimations and find out that contrary to some other studies, there is no evidence that dividend increases (decreases) provide information about the future profitability or earnings of UK firms.

Management Forecasting Ability and Predictive Ability of Dividend Changes for Future Earnings

2021 ◽  
pp. 0148558X2110632
Author(s):  
Hsihui Chang ◽  
Souhei Ishida ◽  
Takuma Kochiyama
Keyword(s):  
Empirical Evidence ◽  
Signaling Theory ◽  
Predictive Ability ◽  
Positive Association ◽  
Moderating Effect ◽  
Large Sample ◽  
Future Earnings ◽  
Dividend Increases ◽  
The Relationship

We revisit the predictive ability of dividend changes for firms’ future earnings and extend the literature by examining the effect of management forecasting ability. Although prior studies have examined the relationship between dividend changes and future earnings, the empirical evidence is mixed. The belief that dividend changes have implications for future earnings depends on the assumption that managers can accurately assess future earnings prospects. In this regard, we posit that the predictive ability of dividends can vary with managers’ forecasting ability. Analyzing a large sample of Japanese dividend-paying firms, we find that dividend changes, particularly dividend increases, are positively associated with increases in future earnings. Consistent with our hypothesis, this positive association is more pronounced for firms with high-forecasting ability managers. Our findings support the signaling theory of dividend changes and indicate that management forecasting ability has a moderating effect on the linkage between firms’ dividend changes and future earnings.

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) ◽  
pp. 563-600 ◽  
Author(s):  
Sheng-Syan Chen ◽  
Kuei-Chin Fu
Keyword(s):  
Research And Development ◽  
Cash Flow ◽  
Stock Prices ◽  
Abnormal Returns ◽  
Positive Association ◽  
Free Cash Flow ◽  
High Q ◽  
Information Signaling ◽  
Dividend Increases ◽  
Free Cash Flow Hypothesis

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.

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