Information effects of dividends: Evidence from the Hong Kong market

Tsz Wan Cheng, Hung Gay Fung, Tak Yan Leung

Research output: Journal article publicationJournal articleAcademic researchpeer-review

16 Citations (Scopus)


The literature has suggested that earnings and earnings forecasts provide stronger signals than dividends about future performance of a firm. We test the information effects of simultaneous announcement of earnings and dividends in the Hong Kong market, distinguished by three interesting features (concentrated family-shareholdings, low corporate transparency, and no tax on dividends). Our results show significant share price reactions to unexpected earnings and dividend changes, but dividends appear to play a dominant role over earnings in pricing, a result contrary to findings in the literature. The signaling hypothesis works primarily for firms with earning increases, while the maturity hypothesis works mainly for firms with earnings declines.
Original languageEnglish
Pages (from-to)23-54
Number of pages32
JournalReview of Quantitative Finance and Accounting
Issue number1
Publication statusPublished - 1 Jan 2007


  • Dividends
  • Earnings
  • Information effects
  • Price reaction

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)
  • Finance

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