Buybacks versus Ordinary Dividends: Marginal Investor Reactions to Cash-return Announcements
AbstractThis paper examines the stock price effect in New Zealand of announcements of increases in dividends and of share repurchases from 1993 to 2009. The results are related to the soft substitution hypothesis on Australian data. Dividend-increase announcements provoke a greater positive effect on the stock price than buyback announcements. The preference of the marginal investor is also examined when firms distribute cash through both mechanisms. Again, investors prefer dividend increases over repurchases, and do so to a greater degree than for firms that only use one form of distribution.
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Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 13/03.
Length: 23 pages
Date of creation: 01 Jan 2013
Date of revision:
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Event Study; Dividends; Stock Repurchases; Abnormal Returns;
Find related papers by JEL classification:
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
- G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
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