Valuation Effects of Greek Stock Dividend Distributions

Abstract

This study analyses the price reaction to stock dividend distributions by firms listed on the Athens Stock Exchange on both the announcement and the ex-dividend day. It also analyses earnings per share, dividends per share and trading volume in the pre-and post-announcement periods. The findings show statistically insignificant abnormal returns on both the announcement and the ex-dividend day. The analysis does not reveal any significant change in earnings per share and dividends per share, but it does reveal a significant decline in the market-adjusted trading volume in the post dividend period. The findings, based on a different institutional environment, expand the empirical evidence on the value effects of stock dividends.

An Empirical Study on Market Reaction around the Bonus Issues Announcements in Bangladesh

“…Sample in this paper includes all the 136 firms from six different sectors, i.e., Engineering, Cement, Food & Allied, Fuel & Power, Pharmaceuticals & Chemicals, and Textile, which are listed on the Dhaka Stock Exchange (DSE) and also have declared stock dividend during 2009 to 2012. In the entire sample, significant price increase before and after the announcement date is detected which lends Malhotra, Thenmozhi and Gopalaswamy (2012), Papaioannou, Travlos, and Tsangarakis (2000), and Dhatt, Kim and Mukherji (1997) results.…”

“…All the CAAR in the pre-announcement period is positive while it becomes negative starting from t+21. On t-2, CAAR stats to decline substantially and continues to do so till day t+2 and then starts to increase again which defies traditional theories that market reacts positively to the announcement of a bonus issue and thus supports Malhotra, Thenmozhi and Gopalaswamy (2012), Papaioannou, Travlos, and Tsangarakis (2000), and Dhatt, Kim and Mukherji (1997) results. …”

“…Signaling hypothesis suggests that the declaration of stock dividend conveys new information to the market in instance where managers have asymmetric information. This theory has received explicit support with few exceptions, for instance, Papaioannou, Travlos and Tsangarakis (2000). Grinblatt, Masulis and Titman (1984) offered the attention getting hypothesis indicating that managers use bonus issue to draw attention from analysts to re-evaluate their future cash flows.…”

“…However, a study in U.S. by Papaioannou, Travlos and Tsangarakis (2000) analyzing price reaction to stock dividend announcements by firms listed on the Athens Stock Exchange found no statistically significant abnormal returns on and around the announcement date. The results of this research can be explained by the fact that most stock dividend distributions are compulsory requirements imposed upon the firms to satisfy regulatory requirements and shareholder approval must be sought regarding the size and terms of the distributions.…”

Market Reaction to Bonus Announcement in Post Global Financial Crisis Era: Evidence from India

“…Mohanty (1999) found that firms which issued bonus shares, have either maintained the payout at the pre-bonus level or only decreased it marginally thereby increasing the payout to shareholders. Papaioannou et al (2000) found no significant abnormal returns on and around announcement period as in Greece it is compulsory requirements imposed upon firms to satisfy the legal requirements a However their research environment is quite different from other markets, stock dividends in Greece are not initiated by firms but they are compulsory requirements imposed upon firms to satisfy legal requirements and any stock dividend announcement should get the approval ISSN 1946-052X 2013 www.macrothink.org/ajfa from the shareholders along with the terms of the distribution. Balachandran et al (2004) observed positive and statistically significant abnormal returns for the announcement day to the following day and found that abnormal returns or contaminated events outperform the uncontaminated events on day 0.…”