Dividend signaling: What can we learn from corporate bond responses?
- Publication Type:
- Journal Article
- Journal of Internet Banking and Commerce, 2016, 21 (1)
- Issue Date:
Files in This Item:
|dividend-signaling-what-can-we-learn-from-corporate-bond-responses (2).pdf||Published Version||217.64 kB|
Copyright Clearance Process
- Recently Added
- In Progress
- Open Access
This item is open access.
© Ruoyun Lucy Zhao, 2016. The literature has reported significant abnormal returns associated with the announcements of dividend changes. Various hypotheses such as information signaling hypothesis, agency theory and wealth transfer hypothesis, have been suggested to explain the abnormal returns and volumes following the corporate stock dividend changes. The response of corporate bond, as a related security not subject to the immediate capitalization changes are used to provide evidence to help distinguish between the signaling and wealth transfer hypothesis. Corporate bonds have a significant decline in bond yields following dividend increase and a significant increase in bond yields following dividend decrease, supporting signaling hypothesis rather than wealth transfer effect.
Please use this identifier to cite or link to this item: