Since Elton and Gruber's (E&G) original article on taxes and ex-dividend price behavior was published in 1970, over 100 articles have appeared in the leading journals of financial economics examining whether prices fall by less than the dividends and, if so, whether or not the phenomenon is due to tax effects, market microstructure effects, or some other effect. The microstructure argument is t...

One of the most important issues in corporate finance is whether dividend changes contain information about future earnings and profitability. Although dividend signaling theories imply that dividend increases signal better prospects (e.g., Bhattacharya 1979; John and Williams 1985; andMiller and Rock 1985), many empirical studies have failed to support this idea. Studies by Watts (1973), Goned...

All 137 publicly listed firms in New Zealand were used to analyse the relationship between dividend changes and earning changes. The question being asked is: Do dividend changes point to good past performance, good current performance, or signal growth in future performance. The findings show that there is no statistically significant relationship between dividend changes and either past or fut...

This study investigates the excess funds hypothesis using samples of special dividends, regular dividend increases, and self-tender offers. All three types of firms tend to have funds in excess of industry norms before the events. The excess funds are largely nonrecurring for special dividend and self-tender offer firms and recurring for regular dividend increase firms. The analysis of the stoc...

We use recent developments on threshold autoregressive models that allow deriving endogenously threshold effects to analyse the evolution of the US stock price–dividend relation over the period 1871 to 2004. More specifically, a mean-reverting dynamic behaviour of the stock price–dividend ratio should be expected once such threshold is reached. Our empirical results showed that significant adju...

information asymmetry in stock market can increase the risk of investment which in turn increases the capital cost of firms. bhattacharya (1979) proposed a hypothesis that states dividend can act as a powerful signal in order to solve information asymmetry problem. we measured information asymmetry by lack of earnings transparency. therefore we examine the effect of earnings transparency on cap...

We study the leverage of firms making large dividend increases. Over the five years following the dividend increase they raise leverage enough to finance the entire dividend increase for that period with debt. This is not explained by trade-off variables or the pecking order. The effect is greatest for big firms with low-powered incentives, suggesting an agency effect whereby they make large di...

This study empirically observes the impact of corporate governance index on dividend payout policy by using the data on thirty textile firms listed at Karachi Stock Exchange. The data cover the five-year period from 2009 to 2013. The data were gathered from financial statements of all the sample firms. Multiple regression models were used to check the impact of corporate governance on dividend ...

It is almost an article of faith that managers have a preference for smooth dividends. Yet, it is not clear if this reflects investors’ preferences. In this paper, we study whether investors indeed value dividend smoothing stocks differently by exploring the implications of dividend smoothing for firms’ stock prices and cost of capital. Using over 80 years of data, we find no robust relationshi...

This paper examines dividend reduction timing at the industry level, asking what firm types choose to reduce their dividends earlier in a dividend reducing cycle than others. Theory is proposed that suggests that higher quality firms will reduce dividends sooner to start rebuilding the firm‟s profitability, while lower quality firms delay reducing their dividends until they must. This paper con...