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The value relevance of dividend announcement: An empirical study of the Greek Stock Market

Author

Listed:
  • Eleni Gkeka

    (Eastern Macedonia and Thrace Institute of Technology, Department of Business Administration, Greece)

  • Kosmas Kosmidis

    (Eastern Macedonia and Thrace Institute of Technology, Department of Business Administration, Greece)

  • Georgios Simitsis

    (Eastern Macedonia and Thrace Institute of Technology, Department of Business Administration, Greece)

Abstract

Purpose: Dividend policy and its impact on share pricing, has been an issue of great concern for the academic society. Over the years, many theories evolved in an effort to explain dividend policy impact on corporate value. A widely accepted approach is the signaling effect theory. The purpose of this paper is to assess the value relevance of dividend announcement. Design/methodology/approach: Our empirical work uses Greek stock market data. We adopt the event study methodology and incorporate in our research elements that differentiate Greek stock market from other developing markets. Findings: Our empirical results tend to support the theory. Decisions on dividend policy seem to affect corporate value. Investors perceive incremented dividend payments as an indication of positive future prospect and vice versa. Research limitations/implications: Different results between large and medium capitalization shares comprise an interesting element for future research.

Suggested Citation

  • Eleni Gkeka & Kosmas Kosmidis & Georgios Simitsis, 2018. "The value relevance of dividend announcement: An empirical study of the Greek Stock Market," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 11(2), pages 44-50, September.
  • Handle: RePEc:tei:journl:v:11:y:2018:i:2:p:44-50
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Dividend announcement; corporate value; abnormal returns; signaling effect;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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