Shareholder Wealth Effects of Dividend Policy Changes in an Emerging Stock Market: The Case of Cyprus

Travlos, Nickolaos; Trigeorgis, Lenos; Vafeas, Nikos

Volume 5, Number 2 / June , Pages 87-154

Multinational Finance Journal, 2001, vol. 5, no.2, pp. 87-112

Nickolaos Travlos , ALBA, Greece, and Cardiff Business School, U.K. Corresponding Author

Lenos Trigeorgis , University of Cyprus, Cyprus, and University of Chicago, U.S.A.
Nikos Vafeas , University of Cyprus, Cyprus

Abstract:
This article examines the stock market reaction to announcements of cash dividend increases and bonus issues (stock dividends) in the emerging stock market of Cyprus. Both events elicit significantly positive abnormal returns, in line with evidence from developed stock markets. This study contends that special characteristics of the Cyprus stock market delimit applicability of most traditional explanations for cash and stock dividends in favor of an information-signaling explanation. The empirical results are generally inconsistent with these contentions

Keywords : cash dividends; emerging markets; stock dividends
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