Abstract
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 language | English |
|---|---|
| Pages (from-to) | 23-54 |
| Number of pages | 32 |
| Journal | Review of Quantitative Finance and Accounting |
| Volume | 28 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Jan 2007 |
Keywords
- Dividends
- Earnings
- Information effects
- Price reaction
ASJC Scopus subject areas
- Accounting
- Business, Management and Accounting(all)
- Finance