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Article
An Empirical Investigation of Stock Dividends-in-Kind
The Journal of Financial Research
  • L. Paige Fields
  • Michael S Wilkins, Trinity University
Document Type
Article
Publication Date
4-1-1996
Disciplines
Abstract

We investigate share price reactions to announcements of dividends payable in the common stock of corporations different from the issuing firm. We find that firms that declare these dividends (typically investment companies) experience positive abnormal returns upon announcement. We also find that such dividends are more likely to be declared when the shares to be distributed have peaked in value. Consistent with this finding, we document negative announcement-period abnormal returns for firms having their shares distributed. Additional tests reveal that prices respond more negatively when the information signal is strongest, when outside ownership is more dispersed, and when management is more entrenched.

Document Object Identifier (DOI)
10.1111/j.1475-6803.1996.tb00587.x
Citation Information
Fields, L.P., & Wilkins, M.S. (1996). An Empirical Investigation of Stock Dividends-in-Kind. The Journal of Financial Research, 19(1), 105-119. doi: 10.1111/j.1475-6803.1996.tb00587.x