Dividend initiations and long-run IPO performance
Dividend initiations are an economically significant event that has important implications for a firmâ€™s future financial capacity. Given the marketâ€™s expectation of a consistent payout, managers of IPO firms must approach the initial dividend decision cautiously. We compare the long-run performance of IPO firms that initiated a dividend with that of similarly matched non-payers, and find robust results that firms which initiated a dividend perform significantly better up to five years after the initiation date. Further tests show that the post-initiation firm performance is explained mostly by dividend theory of signalling rather than free cash flow.
When requesting a correction, please mention this item's handle: RePEc:sae:ausman:v:36:y:2011:i:2:p:267-286. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications)
If references are entirely missing, you can add them using this form.