Volume 42, Issue 4 (July 2014)

    Stock Market Reaction to Various Dividend Announcements: Which Kind of Dividend Announcement is More Significant?

    (Received 12 November 2012; accepted 18 November 2013)

    Published Online: 2014

    CODEN: JTEOAD

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    Abstract

    According to the dividend signalling theory, companies take advantage of their announcement of dividend payout policy to signal the market that the firm now has positive future prospects, which will result in changing stock prices. However, there has been no study to date exploring which factor is more significant to its possible dividends payout portfolio. This study focuses on the impact of various dividends payout policies, cash, stock, and even dual dividends, for 5870 Taiwanese companies in the electronics and non-electronics industries listed in the Taiwan Stock Exchange (TSE) during the period from 2000–2010. The study employs event study methodology to examine the effect of a dividend announcement on the stock price within thirty days of the announcement. The results indicate that, on the whole, stock prices will show significant upward movement after dividend announcements. The observed results also explain why firms typically distribute certain dividends in certain ways and why the market might react more positively to stock dividend announcements in emerging markets.


    Author Information:

    Liu, Jau-Yang
    Department of Accounting, Chinese Culture Univ., Yang-Ming-Shan, Taipei

    Chi, Der-Jang
    Department of Accounting, Chinese Culture Univ., Yang-Ming-Shan, Taipei


    Stock #: JTE20120327

    ISSN: 0090-3973

    DOI: 10.1520/JTE20120327

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    Author
    Title Stock Market Reaction to Various Dividend Announcements: Which Kind of Dividend Announcement is More Significant?
    Symposium , 0000-00-00
    Committee E53