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Dividend Reductions, The Timing of Dividend Payments and Information ContentBalasingham BalachandranLa Trobe University - Department of Finance; Financial Research Network (FIRN) Chandrasekhar KrishnamurtiUniversity of Southern Queensland Michael TheobaldUniversity of Birmingham - Department of Accounting and Finance Berty VidanapathiranaMonash University - Department of Accounting and Finance August 5, 2012 Journal of Corporate Finance, DOI 10.1016/j.jcorpfin.2012.08.002, Forthcoming Finance and Corporate Governance Conference 2010 20th Australasian Finance & Banking Conference 2007 Paper Abstract: Australian companies pay dividends semi-annually with smaller “interim” payments and larger “final” payments. Interim dividends are declared and paid within a less full information environment than final dividends. We analyze the interactions between the timing of dividends and their information content, controlling for share repurchase and tax effects. Dividend reductions that are not associated with share repurchases are statistically significantly related to future abnormal earnings and provide strong support for the information content of dividend reductions. The percentage of dividend reduction is stronger for interim than for final dividend reductions. The market reaction is negatively related to the reduction in imputation tax credit and reacts more aggressively and negatively to interim as compared to final dividend reductions.
Number of Pages in PDF File: 40 Keywords: Price reactions, Australia, Dividend Reductions, Information Content, Franked and Unfranked, Interim and Final JEL Classification: G14, G35 Accepted Paper SeriesDate posted: February 22, 2012 ; Last revised: April 22, 2013Suggested CitationContact Information
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