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Earnings and Dividend Announcements: Are They Interactive? Evidence from the French Context

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  • Mondher Kouki

    (Department of Accounting and Finance, Faculty of Management and Economics of Tunis, Tunisia.)

Abstract

In this study, we examine abnormal stock returns surrounding contemporaneous earnings and dividend announcements in order to shed more light on the substantive relationship between these two financial signals. Our focus is to investigate the possible complementary or substitutive effect on a sample of French firms. The empirical evidence indicates that information content of dividends should be examined jointly with earnings announcement. The coefficients of all the dummy variables are uniformly negative and significant above the 1% confidence level. These results are inconsistent with those of Kane et al. (1984). The significant coefficients support the corroboration hypothesis showing a negative interaction between earnings and dividends. This evidence suggests that investors evaluate the two announcements as two offsetting effects in order to meet any unexpected change in the firm's financial policy.

Suggested Citation

  • Mondher Kouki, 2017. "Earnings and Dividend Announcements: Are They Interactive? Evidence from the French Context," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 387-393.
    • Handle: RePEc:eco:journ1:2017-01-50
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    References listed on IDEAS

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    1. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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    More about this item

    Keywords

    Earnings; Dividends; Event Studies; Corroboration Effect;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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