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Article: Price Reactions to Dividend Initiations and Omissions: Overreaction or Drift?

TitlePrice Reactions to Dividend Initiations and Omissions: Overreaction or Drift?
Authors
MICHAELY, RONITHALER, RICHARD H.WOMACK, KENT L.
Issue Date1995
Citation
The Journal of Finance, 1995, v. 50, n. 2, p. 573-608 How to Cite?
DOI: http://dx.doi.org/10.1111/j.1540-6261.1995.tb04796.x
AbstractThis article investigates market reactions to initiations and omissions of cash dividend payments. Consistent with prior literature we find that the magnitude of short‐run price reactions to omissions are greater than for initiations. In the year following the announcements, prices continue to drift in the same direction, though the drift following omissions is stronger and more robust. This post‐dividend initiation/omission price drift is distinct from and more pronounced than that following earnings surprises. A trading rule employing both samples earns positive returns in 22 out of 25 years. We find little evidence for clientele shifts in either sample. 1995 The American Finance Association
Persistent Identifierhttp://hdl.handle.net/10722/326109
ISSN
0022-1082
2023 Impact Factor: 7.6
2023 SCImago Journal Rankings: 19.139

 

DC FieldValueLanguage
dc.contributor.authorMICHAELY, RONI-
dc.contributor.authorTHALER, RICHARD H.-
dc.contributor.authorWOMACK, KENT L.-
dc.date.accessioned2023-03-09T09:58:06Z-
dc.date.available2023-03-09T09:58:06Z-
dc.date.issued1995-
dc.identifier.citationThe Journal of Finance, 1995, v. 50, n. 2, p. 573-608-
dc.identifier.issn0022-1082-
dc.identifier.urihttp://hdl.handle.net/10722/326109-
dc.description.abstractThis article investigates market reactions to initiations and omissions of cash dividend payments. Consistent with prior literature we find that the magnitude of short‐run price reactions to omissions are greater than for initiations. In the year following the announcements, prices continue to drift in the same direction, though the drift following omissions is stronger and more robust. This post‐dividend initiation/omission price drift is distinct from and more pronounced than that following earnings surprises. A trading rule employing both samples earns positive returns in 22 out of 25 years. We find little evidence for clientele shifts in either sample. 1995 The American Finance Association-
dc.languageeng-
dc.relation.ispartofThe Journal of Finance-
dc.titlePrice Reactions to Dividend Initiations and Omissions: Overreaction or Drift?-
dc.typeArticle-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1111/j.1540-6261.1995.tb04796.x-
dc.identifier.scopuseid_2-s2.0-84993919451-
dc.identifier.volume50-
dc.identifier.issue2-
dc.identifier.spage573-
dc.identifier.epage608-
dc.identifier.eissn1540-6261-

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