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Dividend Initiations by High-Tech Firms

Author

Listed:
  • Michael Lacina

    (University of Houston Clear Lake, School of Business, 2700 Bay Area Boulevard, Houston, TX 77058-1098, USA)

  • Zhaohui Zhang

    (Long Island University-C.W. Post Campus, College of Management, 720 Northern Boulevard, Brookville, NY 11548, USA)

Abstract

We study the stock price and trading volume reactions to dividend initiations by high-tech firms relative to those by non-high tech firms. We find significant positive cumulative abnormal returns and abnormal trading volume for both high-tech and non-high tech firms surrounding dividend initiations. However, when we control for variables such as size and dividend yield, stock returns and trading volume around dividend initiations are higher for high-tech firms than for non-high tech firms. We also find evidence that stock returns and trading volume for high-tech firms are higher with increases in liquid assets, although the volume reaction to increases in liquid assets is stronger than the return reaction, perhaps indicating clientele shifts. Overall, our findings convey stronger investor reaction to dividend initiations by high-tech firms, especially those with sufficient liquid assets.

Suggested Citation

  • Michael Lacina & Zhaohui Zhang, 2008. "Dividend Initiations by High-Tech Firms," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 11(02), pages 201-226.
    • Handle: RePEc:wsi:rpbfmp:v:11:y:2008:i:02:n:s0219091508001325
    DOI: 10.1142/S0219091508001325
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    Citations

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    Cited by:

    1. Xin Che & Andre P. Liebenberg & Ivonne A. Liebenberg & Brandon C. L. Morris, 2018. "The effect of growth opportunities on the market reaction to dividend cuts: evidence from the 2008 financial crisis," Review of Quantitative Finance and Accounting, Springer, vol. 51(1), pages 1-17, July.
    2. Rama Iyer, Subramanian & Sankaran, Harikumar & Walsh, Steve T., 2020. "Influence of Director Expertise on Capital Structure and Cash Holdings in High-Tech Firms," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    3. Chin-Sheng Huang & Chun-Fan You & Hsiao-Fen Hsiao, 2017. "Dividends and Subsequent Profitability: An Examination of a Dual Dividend Stock Market," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-35, March.
    4. Jitka Hilliard & John S. Jahera & Haoran Zhang, 2019. "The US financial crisis and corporate dividend reactions: for better or for worse?," Review of Quantitative Finance and Accounting, Springer, vol. 53(4), pages 1165-1193, November.
    5. Chin-Chen Chien & Cheng-Few Lee & She Chih Chiu, 2016. "Does Corporate Governance Curb Managers’ Opportunistic Behavior of Exploiting Inside Information for Early Exercise of Executive Stock Options?," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(01), pages 1-22, March.

    More about this item

    Keywords

    Dividend initiation; high-tech firm; abnormal returns; trading volume; liquid assets; JEL Classification: G35; JEL Classification: G14;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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