Skip navigation
Title: 

The Declining Information Content of Dividend Announcements and the Effects of Institutional Holdings

Authors: Amihud, Yakov
Li, Kefei
Issue Date: May-2005
Series/Report no.: FIN-02-061
Abstract: We propose an explanation for the “disappearing dividend” phenomenon: a decline in the information content of dividend announcements, which reduces the propensity of firms to use dividends as a costly signal. A reason for a decline in the information content of dividends is the rise in holdings by institutional investors that are more sophisticated and informed. We indeed find a decline in CAR at dividend change announcements since the mid 1970s. Across firms, CAR is a decreasing function of institutional holdings. Institutional investors exploit their superior information and buy before dividend increases. And, dividends are less likely to rise in firms with high institutional holdings.
URI: http://hdl.handle.net/2451/26505
Appears in Collections:Finance Working Papers

Files in This Item:
File Description SizeFormat 
02-61.pdf300.63 kBAdobe PDFView/Open


Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.