The Value Relevance of Dividend Announcement: An Empirical Study of the Greek Stock Market

International Journal of Business and Economic Sciences Applied Research, Vol. 11, No.2, 44-50

Posted: 15 Feb 2019

See all articles by Eleni Gkeka

Eleni Gkeka

Eastern Macedonia and Thrace Institute of Technology, Department of Business Administration, Greece

Kosma Kosmidis

Eastern Macedonia and Thrace Institute of Technology - Department of Business Administration

Georgios Simitsis

Eastern Macedonia and Thrace Institute of Technology - Department of Business Administration

Date Written: March 16, 2018

Abstract

Purpose: Dividend policy and its impact on share pricing, has been an issue of great concern for the academic society. Over the years, many theories evolved in an effort to explain dividend policy impact on corporate value. A widely accepted approach is the signaling effect theory. The purpose of this paper is to assess the value relevance of dividend announcement.

Design/methodology/approach: Our empirical work uses Greek stock market data. We adopt the event study methodology and incorporate in our research elements that differentiate Greek stock market from other developing markets.

Findings: Our empirical results tend to support the theory. Decisions on dividend policy seem to affect corporate value. Investors perceive incremented dividend payments as an indication of positive future prospect and vice versa.

Research limitations/implications: Different results between large and medium capitalization shares comprise an interesting element for future research.

Keywords: Dividend Announcement, Corporate Value, Abnormal Returns, Signaling Effect

JEL Classification: G14, G35, G32

Suggested Citation

Gkeka, Eleni and Kosmidis, Kosma and Simitsis, Georgios, The Value Relevance of Dividend Announcement: An Empirical Study of the Greek Stock Market (March 16, 2018). International Journal of Business and Economic Sciences Applied Research, Vol. 11, No.2, 44-50 . Available at SSRN: https://ssrn.com/abstract=3286998

Eleni Gkeka (Contact Author)

Eastern Macedonia and Thrace Institute of Technology, Department of Business Administration, Greece ( email )

Kosma Kosmidis

Eastern Macedonia and Thrace Institute of Technology - Department of Business Administration

Αγ. Λουκάς
Kavala, 654 04
Greece

Georgios Simitsis

Eastern Macedonia and Thrace Institute of Technology - Department of Business Administration

Αγ. Λουκάς
Kavala, 654 04
Greece

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