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

Author

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  • Apostolos Dasilas
  • Katerina Lyroudi
  • Demetrios Ginoglou

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.

Suggested Citation

  • Apostolos Dasilas & Katerina Lyroudi & Demetrios Ginoglou, 2009. "The impact of dividend initiations on Greek listed firms’ wealth and volatility across information environments," Managerial Finance, Emerald Group Publishing, vol. 35(6), pages 531-543, May.
  • Handle: RePEc:eme:mfipps:v:35:y:2009:i:6:p:531-543
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    References listed on IDEAS

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    1. 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, pages 429-448.
    2. 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.
    3. 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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    Keywords

    Greece; Corporate finances; Dividends; Share prices;

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