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Contagion Effects of Dividend Reduction or Omission Announcements in the Electric Utility Industry

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  • Impson, Michael

Abstract

This study examines the contagion effects of dividend reduction or omission announcements in the electric utility industry. Using a series of ten electric utility dividend announcements covering the period 1979-91, I analyze differences in contagion reactions across utilities. I find the strength of the contagion reaction is significantly related to utility size, average dividend yield, debt ratio, market-to-book ratio, cash flow, and Altman's Z-score. There is also evidence of a flight to quality, including a preference for utilities operating in more favorable regulatory environments. Copyright 2000 by MIT Press.

Suggested Citation

  • Impson, Michael, 2000. "Contagion Effects of Dividend Reduction or Omission Announcements in the Electric Utility Industry," The Financial Review, Eastern Finance Association, vol. 35(1), pages 121-136, February.
    • Handle: RePEc:bla:finrev:v:35:y:2000:i:1:p:121-36
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    Cited by:

    1. Sander Lammers & Massimo Giuliodori & Robert Schmitz & Adam Elbourne, 2023. "Bank Funding, SME lending and Risk Taking," CPB Discussion Paper 447, CPB Netherlands Bureau for Economic Policy Analysis.
    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. Tan Xu & Mohammad Najand & Douglas Ziegenfuss, 2006. "Intra‐Industry Effects of Earnings Restatements Due to Accounting Irregularities," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(5‐6), pages 696-714, June.
    4. Hu, May & Tuilautala, Mataiasi & Kang, Yuni, 2019. "Bandwagon effect: Special dividend payments," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 339-363.
    5. Patrick Bernet & Thomas Getzen, 2008. "Can a violation of investor trust lead to financial contagion in the market for tax-exempt hospital bonds?," International Journal of Health Economics and Management, Springer, vol. 8(1), pages 27-51, March.

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