Does the Order Between Dividend Payment and New Stock Issuance Matter to Stock Price? — Evidence from Taiwan

Mia Twu ()
Additional contact information
Mia Twu: Department of Finance, School of Business, Chengchi University, 64, Section 2, Zhi-Nan Road, Taipei, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2010, vol. 13, issue 03, 363-380

Abstract: I argue that paying dividends before issuing new stock can increase the stock price in the case when firms announce dividend payments and new stock issuance contemporaneously. It enables issuing firms to disentangle the agency problem of paying dividends by newly-raised funds from dividend information for new stock issuances. I employ the seasoned offerings of Taiwan listed firms as the sample, because of their practice of paying dividends once a year. The conditional event study strongly supports this argument and explains why previous studies fail to detect the information conveyed by dividends for new stock issuances.

Keywords: Dividends; new stock issuance; agency problem; signaling; price reaction (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2010
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091510001986
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:rpbfmp:v:13:y:2010:i:03:n:s0219091510001986

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091510001986

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().