THE INFORMATION CONTENT OF DIVIDEND ANNOUNCEMENTS: EVIDENCE FROM FRONTIER MARKETS WITH VARYING TAX REGIMES IN JAMAICA AND TRINIDAD AND TOBAGO, 2001-2017

C. Justin Robinson and Prosper Bangwayo-Skeete

Applied Econometrics and International Development, 2018, vol. 18, issue 2, 73-86

Abstract: We investigate the information content of dividend announcements in two frontier stock markets with unique institutional contexts. One case imposes no taxes on either dividends or capital gains, while another only taxes dividends. When the dividend tax rate was 25%, in the later context, findings revealed a positive association between prices and dividend announcements but no relationship when it fell to 5%. The case without taxes showed no price reaction to constant dividends and dividend increase announcements, but a positive relation with dividend decreases. This positive relation uniquely suggests that tax differentials inadequately explain the information content of dividend announcements.

Keywords: Ownership concentration; Agency costs; Dividend announcements; Caribbean; Event study. (search for similar items in EconPapers)
JEL-codes: G10 G14 G15 (search for similar items in EconPapers)
Date: 2018
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