Dividend Policy Responses to Deregulation in the Electric Utility Industry

Julia D¡¯Souza, John Jacob and Veronda F. Willis

International Journal of Business Administration, 2015, vol. 6, issue 2, 1-16

Abstract: This paper investigates changes in electric utilities¡¯ dividend policies following the onset of deregulation. Consistent with the theory of dividend clienteles, we find that utilities continue to pay high dividends after the onset of deregulation. Under a regulated regime, we find no systematic pattern of associations between dividend changes and abnormal stock returns or future earnings changes. Post-deregulation, however, we find that, consistent with prior research on unregulated firms, dividend increases (decreases) are viewed by the market as good (bad) news. When we examine earnings following changes in dividends, we do not find evidence in favor of the dividend signaling theory.

Keywords: electric utilities; deregulation; dividend policy (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijba11:v:6:y:2015:i:2:p:1-16

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