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The Industry-Wide Implications of Dividend Omission and Initiation Announcements and the Determinants of Information Transfer

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  • Kohers, Ninon

Abstract

In examining the industry-wide implications of dividend omission and initiation announcements, this study finds distinct industry responses for these two events. Specifically, dividend omission announcements have a significantly negative impact on the valuations of industry-related firms. Factors influencing this industry reaction include the Herfindahl index of the announcing firm's industry, the two-day abnormal return of the announcing firm, and its trading status (NASDAQ or NYSE/AMEX). Unlike dividend omissions, dividend initiations evoke a competitive (or negative) response from industry-related firms. The degree of homogeneity in the announcing firm's industry, the announcing firm's abnormal return and its size affect this industry response. Copyright 1999 by MIT Press.

Suggested Citation

  • Kohers, Ninon, 1999. "The Industry-Wide Implications of Dividend Omission and Initiation Announcements and the Determinants of Information Transfer," The Financial Review, Eastern Finance Association, vol. 34(1), pages 137-158, February.
    • Handle: RePEc:bla:finrev:v:34:y:1999:i:1:p:137-58
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    Cited by:

    1. Abdul‐Rahman Khokhar & Sudipto Sarkar, 2020. "Market response to dividend change announcements: unregulated versus regulated US firms," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1759-1799, June.
    2. Balachandran, Balasingham & Faff, Robert & Nguyen, Tuan Anh, 2004. "The intra-industry impact of special dividend announcements: contagion versus competition," Journal of Multinational Financial Management, Elsevier, vol. 14(4-5), pages 369-385.
    3. Hu, May & Tuilautala, Mataiasi & Kang, Yuni, 2019. "Bandwagon effect: Special dividend payments," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 339-363.
    4. Aigbe Akhigbe & Jeff Madura & Anna Martin, 2015. "Intra-industry effects of negative stock price surprises," Review of Quantitative Finance and Accounting, Springer, vol. 45(3), pages 541-559, October.
    5. Carmen Cotei & Joseph Farhat, 2013. "Informational externalities of initial public offerings: Does venture capital backing matter?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(1), pages 80-99, January.
    6. Desir, Rosemond & Seavey, Scott E. & Thevenot, Maya, 2024. "Information transfer of CEO turnover: Evidence from firm-CEO mismatch," Journal of Corporate Finance, Elsevier, vol. 84(C).
    7. Kathryn E. Easterday & Pradyot K. Sen, 2023. "Another look at the dividend-price relationship in the accounting valuation framework," Review of Quantitative Finance and Accounting, Springer, vol. 61(3), pages 879-925, October.
    8. Aigbe Akhigbe & Stephen F. Borde & Ann Marie Whyte, 2003. "Does an Industry Effect Exist for Initial Public Offerings?," The Financial Review, Eastern Finance Association, vol. 38(4), pages 531-551, November.
    9. Liu, Beibei & Tan, Keqi & Wong, Sonia M.L. & Yip, Rita W.Y., 2022. "Intra-industry information transfer in emerging markets: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 140(C).
    10. Shams Pathan & Robert Faff & Carlos Fernández Méndez & Nicholas Masters, 2016. "Financial constraints and dividend policy," Australian Journal of Management, Australian School of Business, vol. 41(3), pages 484-507, August.

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