Market Reactions to Dividend Announcements in Public Companies – Empirical Evidence

Actual Problems of Economics, Scientific Economic Journal, No 1, Vol. 2, 2013

14 Pages Posted: 13 Jan 2015 Last revised: 14 Jan 2015

Date Written: June 20, 2012

Abstract

The effects of the decisions concerning the distribution of profits on market value of a company have been addressed by numerous empirical studies. At the beginning of the paper the author presents the main assumptions of complex and usually contradictory dividend policy theories as well as the clientele effect and the signalling effect strictly related to the dividend policy. Next, an overview is provided of studies analysing how shareholders respond to changes in the dividend policy, which represents the market evaluation of the event’s impact on the company’s value in developed markets. In order to identify similarities among the reactions of various shareholders and the impact of the decisions related to dividend policies in the Polish capital market on the market value, a statistical analysis of the scale of the distribution of profit has been carried out among companies listed on the Warsaw Stock Exchange and the results are provided along with the results of research into the reaction of shareholders to dividend initiation.

Keywords: dividend policy, abnormal returns, event study

JEL Classification: G14, G32, G34

Suggested Citation

Perepeczo, Agnieszka, Market Reactions to Dividend Announcements in Public Companies – Empirical Evidence (June 20, 2012). Actual Problems of Economics, Scientific Economic Journal, No 1, Vol. 2, 2013, Available at SSRN: https://ssrn.com/abstract=2548969 or http://dx.doi.org/10.2139/ssrn.2548969

Agnieszka Perepeczo (Contact Author)

University of Szczecin ( email )

ul. Mickiewicza 64
Szczecin, Zachodniopomorskie PL-71-101
Poland

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