Market Making and Trading in Nasdaq Stocks

Michael Goldstein () and Edward F Nelling

The Financial Review, 1999, vol. 34, issue 1, 27-44

Abstract: In examining the industry-wide implications of dividend omission and initiation announcements, this study finds distinct industry responses for these two events. Specifically, dividend omission announcements have a significantly negative impact on the valuations of industry-related firms. Factors influencing this industry reaction include the Herfindahl index of the announcing firm's industry, the two-day abnormal return of the announcing firm, and its trading status (NASDAQ or NYSE/AMEX). Unlike dividend omissions, dividend initiations evoke a competitive (or negative) response from industry-related firms. The degree of homogeneity in the announcing firm's industry, the announcing firm's abnormal return and its size affect this industry response. Copyright 1999 by MIT Press.

Date: 1999
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