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The Industry‐Wide Implications of Dividend Omission and Initiation Announcements and the Determinants of Information Transfer
Author(s) -
Kohers Ni
Publication year - 1999
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1999.tb00449.x
Subject(s) - dividend , business , herfindahl index , monetary economics , financial economics , economics , finance , marketing
In examining the industry‐wide implications of dividend omission and initiation announcements, this study finds distinct industry responses for these two events. Specifically, dividend omission announcements have a significantly negative impact on the valuations of industry‐related firms. Factors influencing this industry reaction include the Herfindahl index of the announcing firm's industry, the two‐day abnormal return of the announcing firm, and its trading status (Nasdaq or NYSE/AMEX). Unlike dividend omissions, dividend initiations evoke a competitive (or negative) response from industry‐related firms. The degree of homogeneity in the announcing firm's industry, the announcing firm's abnormal return and its size affect this industry response.