Dividend Omissions and Intraindustry Information Transfers

Posted: 11 Dec 2001

See all articles by Gary L. Caton

Gary L. Caton

Washington State University - Department of Finance, Insurance and Real Estate

Jeremy Goh

Singapore Management University - Lee Kong Chian School of Business

Ninon Kohers

University of South Florida - College of Business Administration

Abstract

We examine potential information transfers from companies that announce dividend omissions to their industry rivals. Specifically, we examine the abnormal stock returns and abnormal earnings forecast revisions of rivals after a company makes a dividend omission announcement. Our results show negative and significant abnormal stock returns and negative and significant abnormal forecast revisions for rival companies in response to the announcement, and a significant positive relation between the two. We conclude that a dividend omission announcement transmits unfavorable information across the announcing company's industry that affects cash flow expectations and ultimately stock prices.

JEL Classification: G35

Suggested Citation

Caton, Gary L. and Goh, Jeremy and Kohers, Ninon, Dividend Omissions and Intraindustry Information Transfers. Journal of Financial Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=293191

Gary L. Caton (Contact Author)

Washington State University - Department of Finance, Insurance and Real Estate ( email )

14204 NE Salmon Creek Ave.
Vancouver, WA 98686
United States
360-546-9516 (Phone)
360-546-9037 (Fax)

Jeremy Goh

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Ninon Kohers

University of South Florida - College of Business Administration ( email )

4202 E. Fowler Avenue, BSN 3403
Dept. of Finance
Tampa, FL 33620-5500
United States
813-974-6337 (Phone)
813-974-3030 (Fax)

HOME PAGE: http://www.coba.usf.edu/departments/finance/facult

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