Article1983

STOCK DIVIDENDS AS SIGNALS

44 citations0/0 files storedThe Journal of Financial Research

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Corporate Finance and Governance Financial Markets and Investment Strategies Financial Analysis and Corporate Governance

Abstract

Abstract This study analyzes stock dividends as signals from managers. It is argued that in the presence of information asymmetries between managers and investors, stock dividends provide a relatively inexpensive and unambiguous signalling device. Based on an examination of the daily returns around 317 stock dividend announcements, it is concluded that these announcements are interpreted by investors as signals from managers. Further analysis also indicates that stock dividend size is positively related to announcement day returns.

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2008The cost of capital, corporation finance and the theory of investment 1961Dividend Policy, Growth, and the Valuation of Shares 1980Measuring security price performance 1979Imperfect Information, Dividend Policy, and "The Bird in the Hand" Fallacy 1980Quarterly Dividend and Earnings Announcements and Stockholders' Returns: An Empirical Analysis 1980The effects of capital structure change on security prices 1980Signaling, Information Content, and the Reluctance to Cut Dividends 1982THE INFORMATION CONTENT OF DIVIDEND CHANGES

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