The Love for Stock Dividends: Chinese Evidence

37 Pages Posted: 30 Jan 2013

See all articles by Haozhi Huang

Haozhi Huang

Australian National University (ANU) - Research School of Finance, Actuarial Studies and Applied Statistics

Rulu Pan

University of Queensland - Business School

Qiaoqiao Zhu

Australian National University (ANU) - College of Business and Economics; Financial Research Network (FIRN)

Date Written: January 28, 2013

Abstract

This paper examines the announcement effects of dividends with an emphasis on stock dividends in the Chinese capital market. We find that dividend paying stocks exhibit significantly positive abnormal returns while non-dividend paying stocks show a negative announcement effect. Further, we document that the cumulative abnormal returns for the pure stock dividends and the combined dividends are the main drivers of this announcement effect. In contrast, pure cash dividend stocks experience no significant price run-up before announcement. The significant announcement effect of stock dividends is robust to the controlling of the effect of earnings surprise. We offer some discussion of the possible explanations of the puzzle.

Keywords: stock dividend, earnings surprise

JEL Classification: G35

Suggested Citation

Huang, Haozhi and Pan, Rulu and Zhu, Qiaoqiao, The Love for Stock Dividends: Chinese Evidence (January 28, 2013). Asian Finance Association (AsFA) 2013 Conference. Available at SSRN: https://ssrn.com/abstract=2208280 or http://dx.doi.org/10.2139/ssrn.2208280

Haozhi Huang

Australian National University (ANU) - Research School of Finance, Actuarial Studies and Applied Statistics ( email )

Kingsley Street
acton, ACT 0200
Australia

Rulu Pan (Contact Author)

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Qiaoqiao Zhu

Australian National University (ANU) - College of Business and Economics ( email )

Canberra, Australian Capital Territory 2601
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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