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Stock Market Reaction to Dividend Announcements

Stock Market Reaction to Dividend Announcements PDF Author: Apostolos Dasilas
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Languages : en
Pages : 38

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Book Description
This study investigates the stock market reaction of the Athens Stock Exchange (ASE) to cash dividend announcements for the period 2000-2004. In particular, the paper examines both the stock price and trading volume response to company announcements about dividend distributions. The dividend distribution in Greece features remarkable differences from those of US, UK and other developed markets. First, dividends in Greece are paid on a yearly basis. Second, the corporate law designates with high accuracy the minimum amount for distribution from the net earnings. Third, neither tax on dividends nor on capital gains is imposed in Greece. Despite this restrictive informational environment, we document significant market reaction on dividend announcement dates. Similar market reaction is observed to dividend change announcements, lending support to the quot;information content of dividends hypothesisquot; which predicts market reaction on the direction of that of dividend change.