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Adjustment to Future Dividend Rates in the Prediction of Ex‐rights Prices
Author(s) -
WESTON C. R.
Publication year - 1974
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.1974.tb00866.x
Subject(s) - dividend , equity (law) , economics , financial economics , relation (database) , public economics , law , political science , finance , database , computer science
This paper seeks to expand upon an aspect of rights issues investigated by Merrett, Howe and Newbould in Equity Issues and the London Capital Market, of the prediction of the ex‐rights price. It is suggested on the basis of an Australian sample that the London results are sustained, but that varying the assumptions made we are able to extend our knowledge of the adjustment of share prices to the new information which becomes available in relation to rights issues. This study supports the opinion that the market is comparatively efficient in its assessment of ex‐rights prices.