Fundamentals or Market Movements: What Drives the Dividend Decision?


Savov, Sava ; Weber, Martin


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URL: https://ub-madoc.bib.uni-mannheim.de/1783
URN: urn:nbn:de:bsz:180-madoc-17834
Document Type: Working paper
Year of publication: 2006
Publication language: English
Institution: Business School > Sonstige - Fakultät für Betriebswirtschaftslehre
MADOC publication series: Lehrstuhl für ABWL, Finanzwirtschaft, insb. Bankbetriebslehre (Weber) > Working Papers
Subject: 330 Economics
Classification: JEL: G35 ,
Subject headings (SWD): Dividendenpolitik , Gewinnanteil
Keywords (English): Dividend Policy , Dividend Increases , Market Movements
Abstract: This paper investigates the determinants of the dividend decision. We examine the impact of fundamental variables like earnings, size, or leverage, as well as the effect of stock price movements. Using a sample of German companies, we find a negative relation between the probability for dividend increases and the performance of the firm's shares. Dividend increasing companies performed worse than the overall stock market or corporations that keep dividends constant. In addition, we demonstrate that the documented pattern cannot be explained by models of asymmetric information or catering considerations. Thus, our results suggest that in Germany, where share repurchases were highly restricted, dividends are increased as a compensation for the poor returns of the current shareholders.
Additional information: Available at SSRN: http://ssrn.com/abstract

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Savov, Sava ; Weber, Martin (2006) Fundamentals or Market Movements: What Drives the Dividend Decision? Open Access [Working paper]
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