Revisiting the corroboration effects of earnings and dividend announcements

Abstract

Using a unique market setting in Hong Kong, where (i) all firms release earnings and dividend information in the same announcement; (ii) corporate transparency is low; (iii) dividend income is non-taxable and (iv) corporate ownership is highly concentrated, we re-examine the corroboration effects of earnings and dividends. We use the control firm approach to avoid the return estimation bias resulting from observation clustering. We also add in variables and use econometric procedure to control for the potential impacts of earnings management, special dividends and heteroskedasticity. Our findings show that there exists a corroboration effect between the jointly announced signals. Copyright The Authors Journal compilation (c) 2006 AFAANZ.

Are all dividends created equal? Australian evidence using dividend‐increase track records

“…This figure is also roughly similar to the proportion of negative earnings paired with negative dividend surprises of 14 percent and 7 percent reported inCheng and Leung (2006) andEaston (1991), respectively.© 2017 AFAANZ…”

“…The coefficient on ES 0 is À0.26 percent and significant, suggesting a negative reaction to positive earnings surprises and vice versa. 19 Consistent with Cheng and Leung (2006) the coefficient on ES 0 is not significantly different from zero when we estimate question (1) excluding the variable DEF 1 . 19 The three positive earnings surprise dummies, D(+, À), D(+, 0) and D(+, +), are each associated with significantly positive abnormal returns, consistent with an interaction effect (Kane et al, 1984;Easton, 1991 andGunasekarage andPower, 2006).…”

“…None of the remaining earnings-dividend surprise dummy pairs are significant, 18 At the extreme, two dates each contain 14 dividend increase announcements. 19 Consistent with Cheng and Leung (2006) the coefficient on ES 0 is not significantly different from zero when we estimate question (1) excluding the variable DEF 1 . 1.65*** 1.66*** 1.73*** ***, ** and * indicate significance at the 1, 5 and 10 percent level, respectively.…”

“…This feature enables the construction of a sample of dividend changes that is not contaminated by information conveyed by the earnings announcement (Aharony and Swary, 1980). However, when the two announcements are delivered in close proximity (or simultaneously, as is always the case in Australia), the estimation model of Kane et al (1984) Easton (1991) using Australian data, Cheng and Leung (2006) in Hong Kong, and Gunasekarage and Power (2006) in the U.K. These studies confirm that announcement-period returns are asymmetric depending on whether the earnings and dividend surprise are positively signed, negative or mixed.…”

Presidential Election and Portfolio Selections in the Nigeria Stock Exchange

“…The study focuses on five separate events for a-21 day period around the event announcement (i.e. -10 days to +10 days) as proposed by Cheng and Leung (2006). These five event periods are:…”