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Dividend initiations and long-run IPO performance/ created by Janice C.Y. How, Kian Ngo and Peter Verhoeven

By: Contributor(s): Material type: TextTextSeries: Australian journal of management ; Volume 36, number 2Los Angeles : Sage, 2011Content type:
  • text
Media type:
  • unmediated
Carrier type:
  • volume
ISSN:
  • 03128962
Subject(s): LOC classification:
  • HD31 AUS
Online resources: Abstract: Dividend initiations are an economically significant event that has important implications for a firm’s future financial capacity. Given the market’s expectation of a consistent payout, managers of IPO firms must approach the initial dividend decision cautiously. We compare the long-run performance of IPO firms that initiated a dividend with that of similarly matched non-payers, and find robust results that firms which initiated a dividend perform significantly better up to five years after the initiation date. Further tests show that the post-initiation firm performance is explained mostly by dividend theory of signalling rather than free cash flow.
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Holdings
Item type Current library Call number Vol info Status Notes Date due Barcode
Journal Journal Main Library - Special Collections HD31 AUS (Browse shelf(Opens below)) Vol. 36, no.2 (pages 267-286) Not for loan For in house use only

Dividend initiations are an economically significant event that has important implications for a firm’s future financial capacity. Given the market’s expectation of a consistent payout, managers of IPO firms must approach the initial dividend decision cautiously. We compare the long-run performance of IPO firms that initiated a dividend with that of similarly matched non-payers, and find robust results that firms which initiated a dividend perform significantly better up to five years after the initiation date. Further tests show that the post-initiation firm performance is explained mostly by dividend theory of signalling rather than free cash flow.

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