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UK interim and final dividend reductions: a note on price reaction

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  • Balasingham Balachandran

Abstract

Price reactions to interim and final dividend reductions are found to be significantly negative and stronger for interim dividend reductions. Although the market reacted negatively around final dividend reduction announcements it bounced back to its prior level within one month of the announcements. The magnitude of price reactions to dividend reductions is found to be statistically related to the size of the dividend reduction, the post-announcement effect from day 2 to day 20, the pre-announcement effect from day -20 to day -2, the gearing ratio and the dummy variable interim versus final dividend reduction.

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  • Balasingham Balachandran, 2003. "UK interim and final dividend reductions: a note on price reaction," The European Journal of Finance, Taylor & Francis Journals, vol. 9(4), pages 379-390.
    • Handle: RePEc:taf:eurjfi:v:9:y:2003:i:4:p:379-390
    DOI: 10.1080/1351847022000028430
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    References listed on IDEAS

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    Cited by:

    1. Roland Gillet & Marc‐André Lapointe & Philippe Raimbourg, 2008. "Dividend Policy and Reputation," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(3‐4), pages 516-540, April.

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