Dividend Omissions and Intraindustry Information Transfers

We examine potential information transfers from companies that announce dividend omissions to their industry rivals. Specifically, we examine the abnormal stock returns and abnormal earnings forecast revisions of rivals after a company makes a dividend‐omission announcement. Our results show negativ...

Full description

Saved in:
Bibliographic Details
Published inThe Journal of financial research Vol. 26; no. 1; pp. 51 - 64
Main Authors Caton, Gary L., Goh, Jeremy, Kohers, Ninon
Format Journal Article
LanguageEnglish
Published 350 Main Street , Malden , MA 02148 , USA , and 9600 Garsington Road , Oxford OX4 2DQ , UK Blackwell Publishing, Inc 01.03.2003
Southern Finance Association
Wiley Subscription Services, Inc
SeriesJournal of Financial Research
Subjects
Abnormal returns
Cash flow forecasting
Competition
Dividend policy
Dividends
Earnings forecasting
G35
Hypotheses
Prices
Rates of return
Revisions
Securities markets
Statistical analysis
Stock prices
Studies
United States > US
Online AccessGet full text

Cover

More Information
Summary:We examine potential information transfers from companies that announce dividend omissions to their industry rivals. Specifically, we examine the abnormal stock returns and abnormal earnings forecast revisions of rivals after a company makes a dividend‐omission announcement. Our results show negative and significant abnormal stock returns and negative and significant abnormal forecast revisions for rival companies in response to the announcement, and a significant and positive relation between the two. We conclude that a dividend‐omission announcement transmits unfavorable information across the announcing company's industry that affects cash flow expectations and ultimately stock prices.
Bibliography:istex:5EDB53EBB4B2442FB6E2BD10622BB9B7AEAAA9DA
ArticleID:JFIR044
ark:/67375/WNG-KXTPB2PL-W
ISSN:0270-2592
1475-6803
DOI:10.1111/1475-6803.00044