Numerous studies document abnormal stock returns around announcement of dividend changes and attribute these returns to informational effects. The purpose of this dissertation is to evaluate the influence of dividend buying on stock returns around dividend announcements. / The central hypothesis tested is that stocks likely to be targeted for dividend buying investments provide positive abnormal returns around dividend announcements irrespective of any information inherent in the announcement. Announcements involving no change in the firm's quarterly dividend are used as an approximation of the ideal information-free test sample, and standard residual analysis techniques are employed to assess market reactions to these announcements. / Results are consistent with the hypothesis that dividend buying significantly affects stock returns around dividend announcements. Positive abnormal returns around the announcements are related to variables associated with dividend buying; the relationship with dividend yield is especially strong. The relations do not hold for stocks unsuitable for dividend buying due to tax code provisions, and are significantly changed after the passage of the 1984 Deficit Reduction Act, which reduced the tax advantages of dividend buying. / Informational effects, contemporaneous earnings announcements, and the January effect are considered possible alternative explanations for the abnormal returns reported and their relations to the variables associated with dividend buying. Tests using subsamples controlled for these influences show the effects of dividend buying persist. / The study's findings imply that efforts to measure the informational content of dividends using stock returns around dividend announcements should allow for dividend buying effects, at least over the period before passage of the Deficit Reduction Act. In addition, though corporate investors are assumed to be conservative in choosing short-term investments, the evidence suggests that risky alternatives such as dividend buying are used when they offer rates of return substantially above those on safer investments. / Source: Dissertation Abstracts International, Volume: 48-10, Section: A, page: 2691. / Thesis (Ph.D.)--The Florida State University, 1987.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_76166 |
| Contributors | FEHRS, DONALD HENRY., Florida State University |
| Source Sets | Florida State University |
| Detected Language | English |
| Type | Text |
| Format | 131 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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