The information content of dividend initiation announcements

The case of information technology firms

Susana Yu, Gwendolyn Webb

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

Purpose: The purpose of this paper is to examine the dividend initiation announcements made by firms in the information technology sector as defined in a modern system of industrial classification. Design/methodology/approach: On the basis of a modern classification of the information technology industry, the authors examine a wide range of corporate performance and management measures to discriminate between the two theories of the information revealed by the announcement of dividend initiations, the signaling, and life cycle theories. Findings: The empirical results are more consistent with the corporate life cycle theory of dividends than with the information signaling hypothesis. This finding helps clarify the nature of the information revealed by the announcement. Originality/value: The paper has clear implications for investors who are interested in the growth prospects of technology firms, or for others interested in their prospective stability and degree of maturity.

Original languageEnglish
Pages (from-to)794-811
Number of pages18
JournalManagerial Finance
Volume43
Issue number7
DOIs
StatePublished - 1 Jan 2017

Fingerprint

Information content
Announcement
Dividend initiation
Life cycle theory
Signaling hypothesis
Empirical results
Design methodology
Corporate management
Industry
Investors
Maturity
Dividends
Corporate performance

Keywords

  • Information content of dividend announcements
  • Market efficiency

Cite this

@article{481b5ec415d0490193c7cb56ac870f96,
title = "The information content of dividend initiation announcements: The case of information technology firms",
abstract = "Purpose: The purpose of this paper is to examine the dividend initiation announcements made by firms in the information technology sector as defined in a modern system of industrial classification. Design/methodology/approach: On the basis of a modern classification of the information technology industry, the authors examine a wide range of corporate performance and management measures to discriminate between the two theories of the information revealed by the announcement of dividend initiations, the signaling, and life cycle theories. Findings: The empirical results are more consistent with the corporate life cycle theory of dividends than with the information signaling hypothesis. This finding helps clarify the nature of the information revealed by the announcement. Originality/value: The paper has clear implications for investors who are interested in the growth prospects of technology firms, or for others interested in their prospective stability and degree of maturity.",
keywords = "Information content of dividend announcements, Market efficiency",
author = "Susana Yu and Gwendolyn Webb",
year = "2017",
month = "1",
day = "1",
doi = "10.1108/MF-10-2015-0287",
language = "English",
volume = "43",
pages = "794--811",
journal = "Managerial Finance",
issn = "0307-4358",
publisher = "Emerald Group Publishing Ltd.",
number = "7",

}

The information content of dividend initiation announcements : The case of information technology firms. / Yu, Susana; Webb, Gwendolyn.

In: Managerial Finance, Vol. 43, No. 7, 01.01.2017, p. 794-811.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - The information content of dividend initiation announcements

T2 - The case of information technology firms

AU - Yu, Susana

AU - Webb, Gwendolyn

PY - 2017/1/1

Y1 - 2017/1/1

N2 - Purpose: The purpose of this paper is to examine the dividend initiation announcements made by firms in the information technology sector as defined in a modern system of industrial classification. Design/methodology/approach: On the basis of a modern classification of the information technology industry, the authors examine a wide range of corporate performance and management measures to discriminate between the two theories of the information revealed by the announcement of dividend initiations, the signaling, and life cycle theories. Findings: The empirical results are more consistent with the corporate life cycle theory of dividends than with the information signaling hypothesis. This finding helps clarify the nature of the information revealed by the announcement. Originality/value: The paper has clear implications for investors who are interested in the growth prospects of technology firms, or for others interested in their prospective stability and degree of maturity.

AB - Purpose: The purpose of this paper is to examine the dividend initiation announcements made by firms in the information technology sector as defined in a modern system of industrial classification. Design/methodology/approach: On the basis of a modern classification of the information technology industry, the authors examine a wide range of corporate performance and management measures to discriminate between the two theories of the information revealed by the announcement of dividend initiations, the signaling, and life cycle theories. Findings: The empirical results are more consistent with the corporate life cycle theory of dividends than with the information signaling hypothesis. This finding helps clarify the nature of the information revealed by the announcement. Originality/value: The paper has clear implications for investors who are interested in the growth prospects of technology firms, or for others interested in their prospective stability and degree of maturity.

KW - Information content of dividend announcements

KW - Market efficiency

UR - http://www.scopus.com/inward/record.url?scp=85021711288&partnerID=8YFLogxK

U2 - 10.1108/MF-10-2015-0287

DO - 10.1108/MF-10-2015-0287

M3 - Article

VL - 43

SP - 794

EP - 811

JO - Managerial Finance

JF - Managerial Finance

SN - 0307-4358

IS - 7

ER -