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Impact of a dividend initiation wave on shareholder wealth

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  • K. H. Nguyen

Abstract

This article examines the short- and long-run impacts of a dividend initiation (DI) wave period on shareholders’ wealth. I test two hypotheses. First, firms initiating dividend payments during a DI wave period experience lower announcement returns than those initiating dividend payments outside a DI wave period. Second, firms initiating dividend payments inside a DI wave period underperform those initiating dividend payments outside a DI wave period in the long run. Using a sample of 688 DI announcements from the period 1977 to 2010, I find evidence supporting both hypotheses. Since a firm’s decision to initiate a dividend payment during a DI wave period can have implications on its shareholders’ wealth in both short and long runs, the results of this study can help design investment strategies.

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  • K. H. Nguyen, 2014. "Impact of a dividend initiation wave on shareholder wealth," Applied Financial Economics, Taylor & Francis Journals, vol. 24(8), pages 573-586, April.
    • Handle: RePEc:taf:apfiec:v:24:y:2014:i:8:p:573-586
    DOI: 10.1080/09603107.2014.892197
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    3. Fakhrul Hasan & Umar Nawaz Kayani & Tonmoy Choudhury, 2023. "Behavioral Risk Preferences and Dividend Changes: Exploring the Linkages with Prospect Theory Through Empirical Analysis," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(4), pages 517-535, December.

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