Asymmetric information, dividend reductions, and contagion effects in bank stock returns

Bessler, Wolfgang; Nohel, Tom

doi:10.1016/s0378-4266(99)00097-7

Cited by 86 publications

(35 citation statements)

References 19 publications

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“…Their results are consistent with Michaely et al (1995) and Dasilas and Leventis (2011); they report that decrease dividend announcements have a negative impact on share prices. Bessler and Nohel (2000) In contrast to this stream of research that focuses on short term effect, there are other studies which explore long term valuation effects of dividend announcements. On the long term, dividend impact could be explained by the efficient markets hypothesis beside the signaling theory.…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

The impact of dividend announcements on share price and trading volume

Felimban

Floros

Nguyen

2018

JES

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Purpose The purpose of this paper is to investigate the stock market response to dividend announcements in high growth emerging markets of Gulf countries. Design/methodology/approach The sample includes 1,092 dividend announcements from 299 listed firms over the period 2010-2015. Findings In the environment where there is an absence of capital gain and income tax, the authors find some evidence for the stock price reaction that partly supports the signaling hypothesis. The findings show that the Gulf Cooperation Council (GCC) market is inefficient because of the leakage information before the announcement in bad news, and the delay of share price adjustment in good news. In addition, the authors report significant trading volume (TV) reaction in all the three announcements clusters, where dividends increase, decrease, and are constant, lending support to the hypothesis that the dividend change announcements have an impact on the TV response due to different investors’ preferences. Originality/value This is the first empirical paper on market reaction in share price and TV around dividend announcement using data for the majority of GCC countries.

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Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

The impact of dividend announcements on share price and trading volume

Felimban

Floros

Nguyen

2018

JES

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“…Bessler and Nohel (1996) postulate that announcement effect of dividends cuts should be more severe for banks than for nonfinancial firms due to the fact that 'large' banks may lose large corporate customers if a bank is feared to have financial difficulties as evidenced by the fact that dividends need to be cut. Bessler and Nohel (2000) found that dividends cut announcement by banks can create information externalities for the banks that do not cut dividends. They suggest that if loan portfolios are correlated across banks, then, an announcement of dividend cut by some banks can create contagion i.e., the share prices of the non-dividend cutting banks would also decrease following such announcements because investors panic in reaction to bad news and the bank stocks go down regardless of their financial conditions.…”

Section: Regulatory Influence On the Dividendsmentioning

confidence: 99%

Product market competition, regulation and dividend payout policy of Malaysian banks

Ameer

2008

Journal of Financial Regulation and Compliance

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Purpose -This paper investigates the impact of the product market competition, regulations on the dividend policies of the listed banks, over the period of 1995-2005 in Malaysia. Methodology -Ordered Probit modelling technique and target adjustment model. Findings-We find significant differences in the payout of the banks categorized as selling a non-interest based banking products and mix of both interest and non-interest based banking products. We find that the decision to increase dividends is significantly related to earnings, and the decision to cut dividend is significantly related to the changes in the non-performing loans, corporate and real estate sectors loans ratio and earnings loses. Research implications -Research findings have implication for the regulators of the banks. Originality/value -The research provides a clear link between banks' portfolio choice and earnings that have implications for the dividends in the emerging markets.

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“…Based on regionally syndicated indices, Bekaert et al (2005) also unveil spillovers from the U.S. to Europe, Asia andLatin America during 1980-1986. Focusing on corporate announcements, Lang and Stulz (1992) show that bankruptcy announcements by banks can have a negative effect on other banks, which is in line with Kaufman's (1994) argument that failure of one bank can spread to the rest of the banking system through bank runs. In a similar fashion, liquidity-related announcements (secondary equity offerings) and profit-related announcements (dividend cuts) by banks can impact the banking sector in a contagious manner (Slovin et al, 1992;Bessler and Nohel, 2000). As an example, Slovin et al (1999) provide evidence that dividend cuts by U.S. regional banks exerted a competitive effect on their geographic rivals during 1975-1992.…”

Section: Literature Reviewmentioning

confidence: 99%

Return and Volatility Spillover among Banks and Insurers: Evidence from Pre-Crisis and Crisis Periods

et al. 2014

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This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link Return and Volatility Spillover among Banks and Insurers: Evidence from Pre-and Post-Crisis Periods AbstractWe investigate the interdependencies among the U.S., U.K., EU and Japanese banking and insurance industries within a VAR-BEKK multivariate-GARCH framework.Cross-market and cross-industry return and volatility transmissions and the changes in these

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Asymmetric information, dividend reductions, and contagion effects in bank stock returns

Cited by 86 publications

References 19 publications

The impact of dividend announcements on share price and trading volume

The impact of dividend announcements on share price and trading volume

Product market competition, regulation and dividend payout policy of Malaysian banks

Return and Volatility Spillover among Banks and Insurers: Evidence from Pre-Crisis and Crisis Periods

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