A comparative study of the market reaction to dividend changes by banking firms and industrial firms
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Date
2020
Authors
Siddika, Samira
University of Lethbridge. Dhillon School of Business
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Journal ISSN
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Publisher
Lethbridge, Alta. : University of Lethbridge, Dhillon School of Business
Abstract
This study compares the market reaction to dividend changes (increases and decreases) by banking firms and industrial firms from 1980 to 2017. Our findings show that there is no statistically significant difference between the abnormal returns associated with dividend changes by banks and industrial firms over the last 37 years. Several different categories of the sample were tested. The majority of the scenarios show that the market reaction to dividend changes by banks was not different from the industrial firms. This result is inconsistent with previous literature that identified during short-run or crisis periods, abnormal return to dividend changes is higher for banks than industrial firms. This is the first study that uncovers that the market does not necessarily react differently to dividend change announcements by the two groups. The distinct characteristics of banks do not result in a different market reaction to their dividend changes compared to those of the industrial firms.
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Keywords
Finance , Dividends , Stocks -- Prices , Banks and banking , Stock exchanges , Dissertations, Academic