| Author: | Rankine, G. Stice, E. |
| Title: | Accounting rules and the signalling properties of 20 percent stock dividends |
| Journal: | Accounting Review
1997 : JAN, VOL. 72:1, p. 23-46 |
| Index terms: | STOCKS DIVIDENDS EARNINGS |
| Language: | eng |
| Abstract: | Stock dividends which increase outstanding shares by less than 25 percent require a transfer from retained earnings of the market value of the new shares, a much larger transfer than that required for stock dividends of 25 percent or more. Choosing a distribution factor near, but below, 25 percent may be an indication of management optimism that future income will replenish retained earnings, avoiding constraints on future cash distributions. In this study, firms declaring 20 percent and 25 percent stock dividends are compared. The 20 percent stock dividend firms exhibit significantly greater announcement-period abnormal returns and significantly greater post-declaration cash dividend growth. |
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