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Dividend Initiations and IPO long-run performance

Author

Listed:
  • Nithi Sermsiriviboon

    (Thammasat)

  • Somchai Supattarakul

    (Thammasat University)

Abstract

Dividend initiations are an economically significant event that has important implications for a firm?s future financial capacity. Given that the market?s expectation of a consistent payout, managers of IPO firms must approach the initial dividend decision cautiously. We compare the long run performance of IPO firms that initiated dividends with those of similarly matched non-payers. We found that firms which initiated dividends perform significantly better up to three years after the initiation date. Moreover, we measure investor reactions by 2-day around dividend announcement date cumulative abnormal return. We evidence no statistically significant differences between cumulative abnormal returns (CAR) of IPO firms and cumulative abnormal returns of Non-IPO firms, indicating that investors do not response to dividend announcement of IPO firms more than they do to the dividend announcement of Non-IPO firms.

Suggested Citation

  • Nithi Sermsiriviboon & Somchai Supattarakul, 2014. "Dividend Initiations and IPO long-run performance," Proceedings of International Academic Conferences 0701800, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:0701800
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    File URL: https://iises.net/proceedings/12th-international-academic-conference-prague/table-of-content/detail?cid=7&iid=123&rid=1800
    File Function: First version, 2014
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