Abstract

http://ssrn.com/abstract=1009567
 
 

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The Impact of Dividend Reduction on Shareholders Wealth - Evidence from Australia


Balasingham Balachandran


La Trobe University - Department of Finance; Financial Research Network (FIRN)

Chandrasekar Krishnamurti


Monash University

Berty Vidanapathirana


Monash University - Department of Accounting and Finance

August 2007

20th Australasian Finance & Banking Conference 2007 Paper

Abstract:     
This study examines the stock price reactions to interim and final dividend reductions in Australia. We find that the market reacts more negatively to interim dividend reductions than final dividend reductions consistent with the view that market participants anticipate deterioration in profitability of firms that eventually announce interim dividend reductions. We find that size of the dividend reduction depends on the riskiness of the firm (idiosyncratic risk), size of the firm prior year profitability and changes in the profitability. We also find that reduce dividend at the interim level rather than delay to final stage depends on the prior year profitability and size of the firm.

Number of Pages in PDF File: 19

Keywords: price reaction, Australia, dividend cuts, omissions, interim and final

JEL Classification: G14, G35

working papers series


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Date posted: August 24, 2007 ; Last revised: February 5, 2014

Suggested Citation

Balachandran, Balasingham and Krishnamurti , Chandrasekar and Vidanapathirana, Berty, The Impact of Dividend Reduction on Shareholders Wealth - Evidence from Australia (August 2007). 20th Australasian Finance & Banking Conference 2007 Paper. Available at SSRN: http://ssrn.com/abstract=1009567 or http://dx.doi.org/10.2139/ssrn.1009567

Contact Information

Balasingham Balachandran (Contact Author)
La Trobe University - Department of Finance ( email )
Bundoora, Vic, 3086
Australia
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Chandrasekar Krishnamurti
Monash University ( email )
Wellington Road
Victoria, 3145
Australia
Berty Vidanapathirana
Monash University - Department of Accounting and Finance ( email )
Building 11E
Clayton, Victoria 3800
Australia
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