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Evidence on the Irish stock market's reaction to dividend announcements

Author

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  • T. McCluskey
  • B. M. Burton
  • D. M. Power
  • C. D. Sinclair

Abstract

This study investigates the manner in which the Irish stock market responds to company announcements about dividend payments. In particular, the paper examines whether the predictions of the 'signalling' hypothesis hold or if more recent findings (which suggest that there is little value-relevant information contained in dividend changes) better characterize the Irish market. Data were obtained for a sample of 50 companies whose shares were traded on the Dublin Stock Exchange from 1987 to 2001. Abnormal returns were then calculated for the whole sample and for various dividend-earnings change combinations. The results suggest that dividend announcements are important for Irish investors, but earnings signals appear to have a stronger impact on equity values.

Suggested Citation

  • T. McCluskey & B. M. Burton & D. M. Power & C. D. Sinclair, 2006. "Evidence on the Irish stock market's reaction to dividend announcements," Applied Financial Economics, Taylor & Francis Journals, vol. 16(8), pages 617-628.
  • Handle: RePEc:taf:apfiec:v:16:y:2006:i:8:p:617-628
    DOI: 10.1080/09603100600639058
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    Citations

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    Cited by:

    1. Thomas McCluskey & Aoife Broderick & Amanda Boyle & Bruce Burton & David Power, 2010. "Evidence on Irish financial analysts' and fund managers' views about dividends," Qualitative Research in Financial Markets, Emerald Group Publishing, vol. 2(2), pages 80-99, June.
    2. repec:eee:quaeco:v:65:y:2017:i:c:p:158-167 is not listed on IDEAS
    3. Abdallah Atieh & Simon Hussain, 2012. "Accounting data and UK dividends," Journal of Applied Accounting Research, Emerald Group Publishing, vol. 13(1), pages 56-70, May.
    4. Ksenija Denčić-Mihajlov & Dejan Spasić, 2016. "Mandatory and Voluntary Disclosures of Serbian Listed Companies - Achieved Level and Some Recommendation for Improving their Relevance," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 9(1), pages 27-38, April.
    5. Dasilas, Apostolos & Leventis, Stergios, 2011. "Stock market reaction to dividend announcements: Evidence from the Greek stock market," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 302-311, April.
    6. Berezinets, I. V. & Bulatova, L. A. & Ilina, Y. B., 2015. "Dividend announcements impact on stock returns: Evidence from the emerging market of India," Working Papers 6410, Graduate School of Management, St. Petersburg State University.
    7. Thomas McCluskey & Bruce Burton & David Power, 2007. "Evidence on Irish financial directors' views about dividends," Qualitative Research in Accounting & Management, Emerald Group Publishing, vol. 4(2), pages 115-132, June.
    8. Jais, Mohamad & Abdul Karim, Bakri & Funaoka, Kenta & Abidin, Azlan Zainol, 2009. "Dividend Announcements and Stock Market Reaction," MPRA Paper 19779, University Library of Munich, Germany.

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