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Earnings and Dividend Announcements is there a Corroboration Effect?

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  • Alex Kane
  • Young Ki Lee
  • Alan J. Marcus

Abstract

We examine abnormal stock returns surrounding contemporaneous earnings and dividend announcements in order to determine whether investors evaluate the two announcements in relation to each other.We find that there is a statistically significant interaction effect.The abnormal return corresponding to any earnings or dividend announcement depends upon the value of the other announcement. This evidence suggests the existence of a corroborative relationship between the two announcements. Investors give more credence to unanticipated dividend increases or decreases when earnings are also above or below expectations, and vice versa.

Suggested Citation

  • Alex Kane & Young Ki Lee & Alan J. Marcus, 1983. "Earnings and Dividend Announcements is there a Corroboration Effect?," NBER Working Papers 1248, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1248
    Note: ME
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    References listed on IDEAS

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