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Contagion Effects of Dividend Reduction or Omission Announcements in the Electric Utility Industry
Author(s) -
Impson Michael
Publication year - 2000
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.1540-6288.2000.tb01410.x
Subject(s) - cash flow , dividend , economics , yield (engineering) , dividend yield , electric utility , preference , quality (philosophy) , monetary economics , econometrics , financial economics , dividend policy , microeconomics , finance , engineering , philosophy , materials science , epistemology , electrical engineering , metallurgy
This study examines the contagion effects of dividend reduction or omission announcements in the electric utility industry. Using a series of ten electric utility dividend announcements covering the period 1979–1991, I analyze differences in contagion reactions across utilities. I find the strength of the contagion reaction is significantly related to utility size, average dividend yield, debt ratio, market‐to‐book ratio, cash flow, and Altman's Z‐score. There is also evidence of a flight to quality, including a preference for utilities operating in more favorable regulatory environments.