Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy
The objective of this article is to examine the share market response to substantial changes in dividend policies for companies listed on the Johannesburg Stock Exchange. The results provide strong support for the information content of dividend hypothesis. Investors revise their expectations in res...
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| Format: | Article |
| Language: | English |
| Published: |
AOSIS
1991-09-01
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| Series: | South African Journal of Business Management |
| Online Access: | https://sajbm.org/index.php/sajbm/article/view/896 |
| _version_ | 1818011880500756480 |
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| author | Narendra Bhana |
| author_facet | Narendra Bhana |
| author_sort | Narendra Bhana |
| collection | DOAJ |
| description | The objective of this article is to examine the share market response to substantial changes in dividend policies for companies listed on the Johannesburg Stock Exchange. The results provide strong support for the information content of dividend hypothesis. Investors revise their expectations in response to announcement of significant dividend changes. The market reacts more dramatically to negative than to positive dividend changes. The JSE appears to be inefficient in reacting to the announcement of dividend changes; economically significant abnormal returns are observed for a period of up to 20 trading days after the event. A systematic trader in dividend changing shares would have earned significant abnormal returns even though the market effects large corrections before, and at the announcement date. This pattern is especially clear around dividend omissions and large dividend decreases. |
| first_indexed | 2024-04-14T06:13:10Z |
| format | Article |
| id | doaj.art-5680938287f34129bfcc80c683b98b44 |
| institution | Directory Open Access Journal |
| issn | 2078-5585 2078-5976 |
| language | English |
| last_indexed | 2024-04-14T06:13:10Z |
| publishDate | 1991-09-01 |
| publisher | AOSIS |
| record_format | Article |
| series | South African Journal of Business Management |
| spelling | doaj.art-5680938287f34129bfcc80c683b98b442022-12-22T02:08:17ZengAOSISSouth African Journal of Business Management2078-55852078-59761991-09-01223334010.4102/sajbm.v22i3.896617Reaction on the Johannesburg Stock Exchange to major shifts in dividend policyNarendra Bhana0Graduate School of Business, University of Durban-WestvilleThe objective of this article is to examine the share market response to substantial changes in dividend policies for companies listed on the Johannesburg Stock Exchange. The results provide strong support for the information content of dividend hypothesis. Investors revise their expectations in response to announcement of significant dividend changes. The market reacts more dramatically to negative than to positive dividend changes. The JSE appears to be inefficient in reacting to the announcement of dividend changes; economically significant abnormal returns are observed for a period of up to 20 trading days after the event. A systematic trader in dividend changing shares would have earned significant abnormal returns even though the market effects large corrections before, and at the announcement date. This pattern is especially clear around dividend omissions and large dividend decreases.https://sajbm.org/index.php/sajbm/article/view/896 |
| spellingShingle | Narendra Bhana Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy South African Journal of Business Management |
| title | Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy |
| title_full | Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy |
| title_fullStr | Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy |
| title_full_unstemmed | Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy |
| title_short | Reaction on the Johannesburg Stock Exchange to major shifts in dividend policy |
| title_sort | reaction on the johannesburg stock exchange to major shifts in dividend policy |
| url | https://sajbm.org/index.php/sajbm/article/view/896 |
| work_keys_str_mv | AT narendrabhana reactiononthejohannesburgstockexchangetomajorshiftsindividendpolicy |