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The impact of dividend initiations on Greek listed firms’ wealth and volatility across information environments

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Author Info

  • Apostolos Dasilas
  • Katerina Lyroudi
  • Demetrios Ginoglou
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    Abstract

    Purpose – The purpose of this paper is to investigate the impact of dividend initiations on shareholders’ wealth using a sample of 38 Greek listed firms. Design/methodology/approach – The event study methodology of Brown and Warner was employed to examine the share price reaction to initial dividend announcements across different information environments. Findings – Results show that dividend initiations bring about significant positive abnormal returns in the announcement period. The price response to dividend initiations is inversely associated with the information environment. Finally, the volatility of stock returns is higher in the low information environment group of firms than in the high information environment group of firms. Research limitations/implications – The observations are not many, although the whole population is included, since there are no data available prior to 2000. Practical implications – These findings are useful to researchers, practitioners and investors who have an interest in firms listed on the Athens Stock Exchange (ASE) for their proper strategic decision making. Originality/value – For the first time the stock price behaviour of firms listed on the ASE around dividend initiation announcement dates is examined.

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    File URL: http://www.emeraldinsight.com/journals.htm?issn=0307-4358&volume=35&issue=6&articleid=1789211&show=abstract
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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Managerial Finance.

    Volume (Year): 35 (2009)
    Issue (Month): 6 (May)
    Pages: 531-543

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    Handle: RePEc:eme:mfipps:v:35:y:2009:i:6:p:531-543

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    Web page: http://www.emeraldinsight.com

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    Related research

    Keywords: Corporate finances; Dividends; Greece; Share prices;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Wansley, James W & et al, 1991. "Dividend Change Announcement Effects and Earnings Volatility and Timing," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 14(1), pages 37-49, Spring.
    2. Bhushan, Ravi, 1989. "Firm characteristics and analyst following," Journal of Accounting and Economics, Elsevier, vol. 11(2-3), pages 255-274, July.
    3. Ahron R. Ofer & Anjan V. Thakor, 2004. "A Theory of Stock Price Responses to Alternative Corporate Cash Disbursement Methods: Stock Repurchase and Dividends," Finance 0411031, EconWPA.
    4. Michaely, Roni & Thaler, Richard H & Womack, Kent L, 1995. " Price Reactions to Dividend Initiations and Omissions: Overreaction or Drift?," Journal of Finance, American Finance Association, vol. 50(2), pages 573-608, June.
    5. Richardson, Gordon & Sefcik, Stephan E. & Thompson, Rex, 1986. "A test of dividend irrelevance using volume reactions to a change in dividend policy," Journal of Financial Economics, Elsevier, vol. 17(2), pages 313-333, December.
    6. Shlomo Benartzi & Roni Michaely & Richard Thaler, . "Do Changes in Dividends Signal the Future or the Past?," CRSP working papers 327, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    7. Bhattacharya, Sudipto, 1980. "Nondissipative Signaling Structures and Dividend Policy," The Quarterly Journal of Economics, MIT Press, vol. 95(1), pages 1-24, August.
    8. Alangar, Sadhana & Bathala, Chenchuramaiah T & Rao, Ramesh P, 1999. "The Effect of Institutional Interest on the Information Content of Dividend-Change Announcements," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 22(4), pages 429-48, Winter.
    9. Watts, Ross, 1973. "The Information Content of Dividends," The Journal of Business, University of Chicago Press, vol. 46(2), pages 191-211, April.
    10. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    11. Miller, Merton H & Rock, Kevin, 1985. " Dividend Policy under Asymmetric Information," Journal of Finance, American Finance Association, vol. 40(4), pages 1031-51, September.
    12. Healy, Paul M. & Palepu, Krishna G., 1988. "Earnings information conveyed by dividend initiations and omissions," Journal of Financial Economics, Elsevier, vol. 21(2), pages 149-175, September.
    13. Divecha, Arjun & Morse, Dale, 1983. "Market Responses to Dividend Increases and Changes in Payout Ratios," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 18(02), pages 163-173, June.
    14. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    15. Watts, Ross L, 1976. "Comments on "The Impact of Dividend and Earnings Announcements: A Reconciliation."," The Journal of Business, University of Chicago Press, vol. 49(1), pages 97-106, January.
    16. Kwan, Clarence C. Y., 1981. "Efficient Market Tests of the Informational Content of Dividend Announcements: Critique and Extension," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 16(02), pages 193-206, June.
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