SHAREHOLDER WEALTH, IFORMATION
SIGNALING AND THE SPECIALLY
DESIGNATED DIVIDEND
James A. BRICKLEY
University of Utah, Salt Lake City, UT84112, USA
Received June 1982, final version received October 1982
第十四組
U882602 吳龍鎧
U882615 陳凱文
U882617 李呈穎
Introduction:
1.How does a company handle their dividend policy?
-->regular,SDDs
2.The Definition of "special designated devidends(SDDs)"?
-->"extra","special","year-end"
3.why companies choose SDD instead of increaing regularly
dividend?
-->Concept:A SDD can be viewed as a distribution of cash
to shareholders which may not convey as bright a message
as an increase in the regular dividend.
Three major question to the labeling of dividend increase:
1.Do SDDs convey information?
2.Are SDDs only temporary dividend increase or do they imply
more positive information about future dividends and
earnings?
3.Is different information conveyed by SDDs and regular
dividend increases?
Data sources and sample design:
Sample of SDDs:165 SDDs declared from 1969 to 1979 on common
stock listed on the NEW YORK and Ameriacan Stock Stock
exchange.
(a)The dividend must be reported in Moody's Annual Dividend
Record as an SDD;
(b)the SDD must be the first SDD declared by the firm in
at least a two-yeard period;
(c)the SDD must not be a resumption of a interupped
dividends,the firm must have paid a dividend the quarter
before.
(see table 1.)
Control sample of regular increases:
Pick up 100 observations from SDD, we need to choose 100
relative firm for control.
How to make a paired comparison?
-->"time" and "relative size" must be controled.
-->But fixed in time, it will be hard to fixed in relative size.
-->We tend to find both "in dollar-size" and "in relative size".
(see table 2.)
4. Common stock returns around the
announcement of SDDs and regular
dividend increases
4.1 market reactions to SDDs
4.2 A comparison between the size of
the SDD and the size of the
announcement period stock return
4.3 A comparison of common stock
return surrounding SDDs and regular
dividend increases
Introduction
(1) To investigate if SDDs disclose
information to the market
(2) To examine the nature of this
information
(3) To investigate whether SDDs and
regular dividend increases convey
different information
4.1
Null hypothesis: two-day announcement period
average return=the mean of the non-overlapping
two-day average return from the comparison
period
T=5.9, and the null hypothesis can be
rejected at the 0.01 level of
significance
The evidence in this section of
positive returns around the
announcement of SDDs is
consistent with hypothesis that
SDDs convey positive
information to the market.
4.2
Percentage size:SDD / stock return
The null hypothesis: the announcement period
return = the percentage size of the SDD
T=3.65,this t-value allows us to reject this null
hypothesis at the 1% level
4.3
1. The first test of differential market
reaction to SDDs and regular
dividend increases does not control
for the size of dividend increase
2.
3.
5.Dividend performance
following an SDD
5.1 Descriptive overview of the
dividend performance following an
SDD(table4)
5.2 Dividend payouts following
SDD vs. decisions not to change
the dividend (table 5)
• Anniversary quarter measure (AQM)
• Following quarter measure (FQM)
• Following year measure (FYM)
Table5
•
•
•
•
•
Mean for SDDs
Mean for no changes
Mean difference
Sample size
Standard error
Of mean
t-value for
difference
of mean test
e. one-tailed p-value of 0.04
FQM AQM FYM
1.07 1.50 1.23
1.02 1.10 1.06
0.056 0.407 0.182
90 90
90
0.0297 0.0869 0.0468
1.88e
4.68f
3.89f
f. One-tailed p-value of less than 0.01
Two possible biases
• 1 the no change firms & the SDD firms
policy 的不同
• 2.(by section 6) firms tend to declare SDDs after
periods of good earnings performances.
☺the SDD is more than a temporary
increase in the dividend.
5.3 Dividend payout following SDDs
vs. regular dividend increases (table 6)
• ☺ the dividend performance following a
regular dividend increase dominates that
following an SDD.
Table 6
• (1)FQM
SDD
Regular dividend
increse
N Mean F-value P-value
65 1.06
40 1.40
45.82
63 1.39
35 1.75
5.22
0.0001
(2)AQM
SDD
Regular dividend
increse
0.0250
(3)FYM
SDD
Regular dividend
increse
63 1.20
35 1.52
13.84
0.0003
6.Earning performance surrounding
SDDs
• 6.1 Earning changes from the fiscal year
prior to announcement to the fiscal year of
announcement.(table7)
SDD
Regular
N Mean %non-negative F-value
63 58% 92%
0.078
35 51% 94%
divivdend Increase
• 6.2 Earning changes from the fiscal year of
announcement to the fiscal year after the
announcement (table8)
•
N Mean %non-negative F-value
SDD
63 -1% 66%
2.89b
Regular 35 30% 77%
Divivdend increase
b p-value 0.0462
Summary
謝 謝 大 家