Information effects of dividends: Evidence from the Hong Kong market

Information effects of dividends: Evidence from the Hong Kong market The literature has suggested that earnings and earnings forecasts provide stronger signals than dividends about future performance of a firm. We test the information effects of simultaneous announcement of earnings and dividends in the Hong Kong market, distinguished by three interesting features (concentrated family-shareholdings, low corporate transparency, and no tax on dividends). Our results show significant share price reactions to unexpected earnings and dividend changes, but dividends appear to play a dominant role over earnings in pricing, a result contrary to findings in the literature. The signaling hypothesis works primarily for firms with earning increases, while the maturity hypothesis works mainly for firms with earnings declines. Review of Quantitative Finance and Accounting Springer Journals

Information effects of dividends: Evidence from the Hong Kong market

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Kluwer Academic Publishers-Plenum Publishers
Copyright © 2006 by Springer Science+Business Media, LLC
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
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