HOW INVESTORS INTERPRET CHANGES IN CORPORATE FINANCIAL POLICY

Paul M. Healy and Krishna G. Palepu

Journal of Applied Corporate Finance, 1989, vol. 2, issue 3, 59-64

Abstract: In May 1987, Apple Computer announced that it would pay $5 million in cash dividends on its common stock your cents per share) for the first time in its history. On the day of the announcement, the market value of Apple's equity rose by $219 million. In May 1986, Emhart announced that it intended to issue 2.75 million shares to raise $102 million in new equity. Following the announcement, the market value of its existing equity fell by $23 million. In February 1939, General Motors declared a 2‐for‐1 stock split for the first time since 1955, and increased its dividends. The announcement led the market value of GM's equity to increase by $1.3 billion.

Date: 1989
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