New Evidence on the Information Content of Dividend Announcements

Quarterly Review of Economics and Finance, Vol 38 No 2, Summer 1998

Posted: 8 Apr 1998

See all articles by Robert Kaestner

Robert Kaestner

University of Chicago; National Bureau of Economic Research (NBER)

Abstract

This study presents new evidence on the relationship between dividend announcements and stock price responses, and provides a more comprehensive empirical analysis than that previously found in the literature. We simultaneously test several competing theories regarding the information content of dividends using two types of announcements: dividend initiations and specially designated dividends. The results of our analyses provide strong support for the single signal, cash-flow signalling hypothesis and only weak support for the John and Lang (1991) multiple signal, cash-flow signalling model. Supporting evidence is also presented for the predictions of the free-cash flow hypothesis.

JEL Classification: G12, G14

Suggested Citation

Kaestner, Robert, New Evidence on the Information Content of Dividend Announcements. Quarterly Review of Economics and Finance, Vol 38 No 2, Summer 1998, Available at SSRN: https://ssrn.com/abstract=74228

Robert Kaestner (Contact Author)

University of Chicago ( email )

1155 East 60th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

5 Hanover Square 16th floor
New York, NY 10004
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,138
PlumX Metrics