The value relevance of dividend announcement: An empirical study of the Greek Stock Market

Purpose: Dividend policy and its impact on share pricing, has been an issue of great concern for the academic society. Over the years, many theories evolved in an effort to explain dividend policy impact on corporate value. A widely accepted approach is the signaling effect theory. The purpose of this paper is to assess the value relevance of dividend announcement. Design/methodology/approach: Our empirical work uses Greek stock market data. We adopt the event study methodology and incorporate in our research elements that differentiate Greek stock market from other developing markets. Findings: Our empirical results tend to support the theory. Decisions on dividend policy seem to affect corporate value. Investors perceive incremented dividend payments as an indication of positive future prospect and vice versa. Research limitations/implications: Different results between large and medium capitalization shares comprise an interesting element for future research.