Dividend changes and stock price informativeness

Amedeo De Cesari and Winifred Huang ()

Journal of Corporate Finance, 2015, vol. 35, issue C, 1-17

Abstract: We investigate how private information in stock prices impacts quarterly dividend changes. We find that the positive relationship between past returns and current dividend changes strengthens when returns convey more private information. This finding is robust to the use of several price informativeness measures and the inclusion of managerial private information and stock overvaluation measures. Managers seem to learn new information from stock prices that they use when deciding on their dividend policy. This study highlights private information in stock prices as an important determinant of dividend policy and contributes to the literature on the real effects of financial markets.

Keywords: Dividend changes; Stock price informativeness; Stock returns (search for similar items in EconPapers)
JEL-codes: G14 G35 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:35:y:2015:i:c:p:1-17

DOI: 10.1016/j.jcorpfin.2015.08.004

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