Corporate Dividends and Seasoned Equity Issues: An Empirical Investigation

Claudio F Loderer and David C Mauer

Journal of Finance, 1992, vol. 47, issue 1, 201-25

Abstract: This paper investigates whether managers rely on dividends to obtain a higher price in a stock offering and whether the stock price reaction to dividend and offering announcements justifies such a coordination. The evidence does not support either conjecture. Issuing firms are not more likely to pay or increase dividends than nonissuing firms. Moreover, there is little evidence that firms time stock-offering announcements right after dividend declarations to benefit from the attendant information disclosure. The analysis of dividend and stock-offering announcement effects suggests few if any benefits from linking dividend and stock-offering announcements. Copyright 1992 by American Finance Association.

Date: 1992
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