Information Associated with Dividend Initiations: Firm-Specific or Industry-Wide?
Financial Management, Vol. 27, No. 3, Autumn 1998, Special Issue: Dividends
Posted: 9 Feb 1999
Abstract
We examine the intra-industry information effects of announcements of dividend initiations. Our results indicate that the stock prices of industry competitors do not react to dividend initiations. Further, analysts do not revise their earnings forecasts for nonannouncing, rival firms. These findings are not sensitive to the manner in which we estimate abnormal returns or calculate forecast revisions. Thus, the information conveyed to the market by the decision to initiate dividends contains no industry-wide component. Dividend initiation appears to be a firm-specific event.
JEL Classification: G35
Suggested Citation: Suggested Citation