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The information content of cash dividend announcements in a unique environment

Journal Article


Abstract


  • Due to its distinctive institutional background, Oman offers a valuable opportunity to examine stock price reactions to dividend announcements. In Oman, (1) there are no taxes on dividends and capital gains, (2) there is a high concentration of share ownership, (3) there is low corporate transparency, and (4) firms frequently change their dividends. Our results show that announcements of dividend increases are associated with increased stock prices, while announcements of dividend decreases cause decreases in stock prices. Firms that do not change their dividends experience insignificant negative returns. These results contradict tax-based signaling models, which argue that higher taxes on dividends relative to capital gains are a necessary condition for dividends to be informative.

Authors


  •   Al-Yahyaee, Khamis (external author)
  •   Pham, Toan (external author)
  •   Walter, Terry S.

Publication Date


  • 2011

Citation


  • Al-Yahyaee, K. H., Pham, T. M. & Walter, T. S. (2011). The information content of cash dividend announcements in a unique environment. Journal of Banking and Finance, 35 (3), 606-612.

Scopus Eid


  • 2-s2.0-78651413402

Ro Metadata Url


  • http://ro.uow.edu.au/buspapers/1195

Has Global Citation Frequency


Number Of Pages


  • 6

Start Page


  • 606

End Page


  • 612

Volume


  • 35

Issue


  • 3

Place Of Publication


  • Netherlands

Abstract


  • Due to its distinctive institutional background, Oman offers a valuable opportunity to examine stock price reactions to dividend announcements. In Oman, (1) there are no taxes on dividends and capital gains, (2) there is a high concentration of share ownership, (3) there is low corporate transparency, and (4) firms frequently change their dividends. Our results show that announcements of dividend increases are associated with increased stock prices, while announcements of dividend decreases cause decreases in stock prices. Firms that do not change their dividends experience insignificant negative returns. These results contradict tax-based signaling models, which argue that higher taxes on dividends relative to capital gains are a necessary condition for dividends to be informative.

Authors


  •   Al-Yahyaee, Khamis (external author)
  •   Pham, Toan (external author)
  •   Walter, Terry S.

Publication Date


  • 2011

Citation


  • Al-Yahyaee, K. H., Pham, T. M. & Walter, T. S. (2011). The information content of cash dividend announcements in a unique environment. Journal of Banking and Finance, 35 (3), 606-612.

Scopus Eid


  • 2-s2.0-78651413402

Ro Metadata Url


  • http://ro.uow.edu.au/buspapers/1195

Has Global Citation Frequency


Number Of Pages


  • 6

Start Page


  • 606

End Page


  • 612

Volume


  • 35

Issue


  • 3

Place Of Publication


  • Netherlands