Dividend Changes, Earnings Reports, And Share Prices: Some Australian Findings

Abstract

Australian companies typically announce profit figures and dividend payouts at the same time. During the 60's and early 70's, profit and dividend changes were positively correlated, and were associated with significant share price changes, after abstracting from market effects. When profit and dividend reports gave conflicting signals, share prices tended to decline.

Share Capitalization Changes, Information, And the Australian Equity Market

“…Dividend increases have similar and related effects, as shown below and by Brown, Finn and Hancock (1977). Sharpe and Walker (1975) show similar and related results for asset revaluations, which tend to occur around the time of bonus issues.…”

“…If a dividend change conveys information about a firm's future cash flows, then the larger the dividend change, the greater is the expected change in share price. Brown, Finn and Hancock (1977) provide evidence in support of this proposition. In our study the mean ratios, of dividends received after the issue (adjusted for the capital change) to dividends received before, were 1.23 and 1.14 for bonus and rights issues respectively.…”

Revisiting the corroboration effects of earnings and dividend announcements

“…A reduction in dividend still implies a positive payout, which is definitely more desirable than having nothing. 17 We perform two-sample t-test and regression analysis to examine the potential different signals of dividend omission in year y as a result of the reduction in dividend payment in year y (from a positive dividend payment on y − 1) and to the 'no change effect' in dividend payment in y − 1 and y (Brown et al, 1977). For the two-sample comparison (two-sample t-test and Mann-Whitney test), the mean difference between 'Earnings Decrease -Dividend (y − 1) Positive -Dividend (y) Zero' subsample and 'Earnings Decrease -Dividend (y − 1) ZeroDividend (y) Zero' subsample for all independent and overlapping periods are not significant.…”

Dividends and the Value of the Firm: Evidence from the Australian Equity Market

“…6Lintner (1956 shows evidence of dividend stabilization policies and target payout ratios. Pettit (1972), Watts (1973) and Brown, Finn and Hancock (1977) provide evidence on price revision around the time of dividend announcements. dividends is zero, given market efficiency.…”

“…Consequently, it will be revealed in "announcement effect" studies, such as Pettit (1972Pettit ( ), I,-i'atts (1973 and Brown, "Finn and Hancock (1977).…”