Market reactions to dividend announcements under different business cycles

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, I examine the impact of business cycles on the market reaction to dividend announcements of large-cap firms in the Tel Aviv Stock Exchange. The findings show that the 2001-7 significant positive first-day dividend announcement reaction is derived from the significantly stronger market reaction during the crisis period of 2001-2. Hence, I conclude that the business cycle is a critical parameter in the investors' interpretation of dividend announcements. During busts, a dividend announcement is perceived as a strong and reliable signal about the state of the corporation, compared to times of normality.

Original languageEnglish
Pages (from-to)72-85
Number of pages14
JournalEmerging Markets Finance and Trade
Volume47
Issue numberSUPPL. 5
DOIs
StatePublished - 1 Nov 2011

Keywords

  • business cycles
  • dividend announcement reaction
  • efficient market hypothesis

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance (all)

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