The impact of dividend reduction on shareholders wealth: evidence from Australia

Balachand, Bala and Krishnamurti, Chandrasekhar and Vidanapathirana, Berty (2007) The impact of dividend reduction on shareholders wealth: evidence from Australia. In: 20th Australasian Finance and Banking Conference (AFBC 2007) , 12-14 Dec 2007, Sydney, Australia.

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Abstract

This study examines the stock price reactions to interim and final dividend reductions in Australia. We find that the market reacts more negatively to interim dividend reductions than final dividend reductions consistent with the view that market participants anticipate deterioration in profitability of firms that eventually announce interim dividend reductions. We find that size of the dividend reduction depends on the riskiness of the firm (idiosyncratic risk), size of the firm prior year profitability and changes in the profitability. We also find that reduce dividend at the interim level rather than delay to final stage depends on the prior year profitability and size of the firm.


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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Additional Information: No evidence of copyright restrictions. http://ssrn.com/abstract=1009567
Depositing User: Professor Chandrasekhar Krishnamurti
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 23 Oct 2011 06:59
Last Modified: 03 Jul 2013 00:08
Uncontrolled Keywords: price reaction; Australia; dividend cuts; omissions; interim and final
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150399 Business and Management not elsewhere classified
14 Economics > 1402 Applied Economics > 140207 Financial Economics
Socio-Economic Objective (SEO2008): B Economic Development > 91 Economic Framework > 9102 Microeconomics > 910206 Market-Based Mechanisms
URI: http://eprints.usq.edu.au/id/eprint/9150

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