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- Title
Wealth and Signalling Effects of Cash Dividends.
- Authors
SARMA, L. V. L. N.; KOK LEE KUIN
- Abstract
The objective of the present study is to identify the wealth effect and signalling significance of cash dividend, viz., regular cash dividend and special dividend in the Malaysian corporate sector. This study convincingly conveys that regular cash dividend increase and special dividend generate significant wealth effect. Special dividend, surprisingly, turned out to be a more effective wealth creation tool as compared to regular dividend increase. In the matter of the signalling effect, regular cash dividend increase is found to possess very significant information about future, current as well as past earnings. Special dividend, could not demonstrate a significant signalling role in predicting future corporate earnings. Extending the explanation of empirical results on the signalling front to the process of generating investor confidence in reported corporate earnings amidst wide-spread 'earnings management' practices is unique to the present paper.
- Subjects
WEALTH effect (Economics); DIVIDEND policy; CORPORATE profits; EARNINGS management; CAPITAL market
- Publication
Finance India, 2013, Vol 27, Issue 4, p1157
- ISSN
0970-3772
- Publication type
Article