Shareholder wealth effects of stock dividends in a unique environment

Khamis Al-Yahyaee ()

Journal of International Financial Markets, Institutions and Money, 2014, vol. 28, issue C, 66-81

Abstract: We investigate shareholder wealth effects of stock dividends using a unique dataset from Oman in which many market frictions that are used to explain the stock dividend announcement effect are either absent or limited. We find a positive stock market reaction to stock dividend distributions. We also find that firms that distribute stock dividends experience favorable changes in operating performance during the seven-year period around the stock dividend distribution. Our results suggest that stock dividends are used primarily to signal future operating performance and to a lesser extent to reduce stock prices to an optimal trading range.

Keywords: Stock dividends; Trading range; Market microstructure; Bid-ask spread; Signaling (search for similar items in EconPapers)
JEL-codes: G14 G35 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:28:y:2014:i:c:p:66-81

DOI: 10.1016/j.intfin.2013.10.003

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