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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27441
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| Title: | The Declining Information Content of Dividend Announcements and the
Effect of Institutional Holdings |
| Authors: | Amihud, Yakov
Li, Kefei |
| Issue Date: | Aug-2002 |
| Series/Report no.: | SC-AM-02-11 |
| Abstract: | We propose an explanation for the "disappearing dividend"
phenomenon: the decline in the information content of dividend
announcements. This reduces the propensity of firms to pay or increase
dividends, since dividends are costly. The decline in the information
content of dividend, is partly because of the rise in stockholding by
institutional investors that are more sophisticated and informed. Our
results show a decline in the stock price reaction to announcements of
dividend changes since the mid 1970s. Across firms, the price reaction
to dividend news is smaller in firms with high institutional holdings.
Institutional investors exploit their superior information by buying
before dividend increases and selling afterwards. And, firms with high
institutional holdings are less likely to raise dividends. |
| URI: | http://hdl.handle.net/2451/27441 |
| Appears in Collections: | Asset Management
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