Tee, Kenny, and Tessama, Abiot (2019) Stock market reactions to dividend and earnings announcements in a tax-free environment. International Finance, 22 (2). pp. 241-259.

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Abstract

This paper investigates the stock market reactions to dividend and earnings announcements for firms listed in the United Arab Emirates (UAE), where there is no tax on dividend income or capital gains. This tax-free setting allows us to examine the tax-based signalling hypothesis, which holds that a change in dividends does not offer important information when dividend income is not taxed. Contrary to the tax-based signalling theory, we find a positive (negative) price reaction to dividend initiations and increases (dividend omissions and decreases). We further examine the signalling hypothesis, which proposes that dividends convey information about firms' future earnings. We find that the size of the dividend increases or decreases does not predict future earnings.

Item ID:	75689
Item Type:	Article (Research - C1)
ISSN:	1468-2362
Copyright Information:	© 2018 John Wiley & Sons Ltd.
Date Deposited:	17 Aug 2022 06:56
FoR Codes:	38 ECONOMICS > 3801 Applied economics > 380107 Financial economics @ 100%
SEO Codes:	15 ECONOMIC FRAMEWORK > 1505 Microeconomics > 150503 Industrial organisations @ 100%
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