Buybacks versus Ordinary Dividends: Marginal Investor Reactions to Cash-return Announcements
Type of content
Discussion / Working Papers
UC permalink
Publisher's DOI/URI
Thesis discipline
Degree name
Publisher
University of Canterbury. Department of Economics and Finance
Journal Title
Journal ISSN
Volume Title
Language
Date
2013
Authors
Anderson, W.
McLaughlin, S.
Abstract
This paper examines the stock price effect in New Zealand of announcements of increases in dividends and of share repurchases from 1993 to 2009. The results are related to the soft substitution hypothesis on Australian data. Dividend-increase announcements provoke a greater positive effect on the stock price than buyback announcements. The preference of the marginal investor is also examined when firms distribute cash through both mechanisms. Again, investors prefer dividend increases over repurchases, and do so to a greater degree than for firms that only use one form of distribution.
Description
WORKING PAPER No.03/2013
Citation
Anderson, W., McLaughlin, S. (2013) Buybacks versus Ordinary Dividends: Marginal Investor Reactions to Cash-return Announcements..
Keywords
Event Study, Dividends, Stock Repurchases, Abnormal Returns
Ngā upoko tukutuku/Māori subject headings
ANZSRC fields of research
Fields of Research::35 - Commerce, management, tourism and services::3502 - Banking, finance and investment::350208 - Investment and risk management
Fields of Research::38 - Economics::3801 - Applied economics::380107 - Financial economics
Fields of Research::38 - Economics::3801 - Applied economics::380107 - Financial economics