Portal de Periódicos da CAPES

Information Environment, Dividend Changes, and Signaling: Evidence from ADR Firms*

2011; Wiley; Volume: 29; Issue: 2 Linguagem: Inglês

10.1111/j.1911-3846.2011.01101.x

1911-3846

Raj Aggarwal, Jian Cao, Feng Chen,

Corporate Taxation and Avoidance

Contemporary Accounting ResearchVolume 29, Issue 2 p. 403-431 Information Environment, Dividend Changes, and Signaling: Evidence from ADR Firms* RAJ AGGARWAL, RAJ AGGARWAL University of AkronSearch for more papers by this authorJIAN CAO, JIAN CAO Florida Atlantic UniversitySearch for more papers by this authorFENG CHEN, FENG CHEN University of TorontoSearch for more papers by this author RAJ AGGARWAL, RAJ AGGARWAL University of AkronSearch for more papers by this authorJIAN CAO, JIAN CAO Florida Atlantic UniversitySearch for more papers by this authorFENG CHEN, FENG CHEN University of TorontoSearch for more papers by this author First published: 07 May 2011 https://doi.org/10.1111/j.1911-3846.2011.01101.xCitations: 28 † Accepted by Peter Clarkson. Without implicating them in any errors which remain our own, we would like to thank Peter Clarkson (the associate editor), two anonymous reviewers, Gus De Franco, Esther Eiling, Xiaohua Fang, Ole-Kristian Hope, Gordon Richardson, and workshop participants at Florida Atlantic University, the 2007 AAA annual meeting, the 2007 AAA International Accounting Section mid-year meeting, and the 2008 accounting and finance conference at Xiamen University for valuable comments; Yingtung Chik, Julie Christie, Shiyuan Li, Jomo Sankara, David Song, Joe Trainor, Victor Yeung, and Joon Yong for able research assistance; and Shilpa Patel from J.P.Morgan for providing data on ADRs. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat References Aggarwal, R., L. Klapper, and P. Wysocki. 2005. Portfolio preferences of foreign institutional investors. Journal of Banking and Finance 29 (12): 2919–46. Alford, A. W., and P. G. Berger. 1999. A simultaneous equations analysis of forecast accuracy, analyst following, and trading volume. Journal of Accounting, Auditing, and Finance 14 (3): 219–40. Allen, E., and R. Michaely. 2003. Payout policy. In Handbook of the economics of finance, ed. G. Constantinides, M. Harris, and R. Stulz, 337–430. Amsterdam: North-Holland. Amihud, Y., and K. Li. 2006. The declining information content of dividend announcements and the effects of institutional investors. Journal of Financial and Quantitative Analysis 41 (3): 637–60. Asquith, P., and D. W. Mullins. 1983. The impact of initiating dividend payments on shareholders’ wealth. Journal of Business 56 (1): 77–96. Bacidore, J., and G. Sofianos. 2002. Liquidity provision and specialist trading in NYSE-listed non-U.S. stocks. Journal of Financial Economics 63 (1): 133–58. Baker, H. K., J. R. Nofsinger, and D. G. Weaver. 2002. International cross-listing and visibility. Journal of Financial and Quantitative Analysis 37 (3): 495–521. Baruch, S., G. A. Karolyi, and M. L. Lemmon. 2007. Multimarket trading and liquidity: Theory and evidence. The Journal of Finance 62 (5): 2169–200. Benartzi, S., R. Michaely, and R. H. Thaler. 1997. Do changes in dividends signal the future or the past? The Journal of Finance 52 (3): 1007–34. Bhattacharya, S. 1979. Imperfect information, dividend policy, and “the bird in hand” fallacy. Bell Journal of Economics 10 (1): 259–70. Bradshaw, M. T., B. J. Bushee, and G. S. Miller. 2004. Accounting choice, home bias, and U.S. investment in non-U.S. firms. Journal of Accounting Research 42 (5): 795–841. Brav, A., J. R. Graham, C. R. Harvey, and R. Michaely. 2005. Payout policy in the 21st century. Journal of Financial Economics 77 (3): 483–527. Bulan, L., N. Subramanian, and L. Tanlu. 2007. On the timing of dividend initiations. Financial Management 36 (1): 31–65. Bushee, B. 2001. Do institutional investors prefer near-term earnings over long-run value. Contemporary Accounting Research 18 (2): 207–46. Callaghan, S. R., and C. B. Barry. 2003. Tax-induced trading of equity services: Evidence from the ADR market. The Journal of Finance 58 (4): 1583–611. Center for International Financial Analysis and Research (CIFAR). 1995. International accounting and auditing trends. Princeton, NJ: CIFAR Publications Inc. Chen, S., T. Shevlin, and Y. H. Tong. 2007. Does the pricing of financial reporting quality change around dividend changes? Journal of Accounting Research 45 (1): 1–40. Clarkson, P., A. Dontoh, G. Richardson, and S. Sefcik. 1992. The voluntary inclusion of earnings forecasts in IPO prospectuses. Contemporary Accounting Research 8 (2): 601–26. Clarkson, P., J. Kao, and G. Richardson. 1994. The inclusion of forecasts in the MD&A section of annual reports: A voluntary disclosure perspective. Contemporary Accounting Research 11 (1): 423–50. Covrig, V. M., M. L. DeFond, and M. Hung. 2007. Home bias, foreign mutual fund holdings, and the voluntary adoption of international accounting standards. Journal of Accounting Research 45 (1): 41–70. Crawley, M., B. Ke, and Y. Yu. 2009. Causes and consequences of cross-listed firms’ voluntary adoption of U.S. securities laws: The case of Regulation Fair Disclosure. Working paper, University of Texas at Austin and Pennsylvania State University. Dahlquist, M., and G. Robertson. 2001. Direct foreign ownership, institutional investors, and firm characteristics. Journal of Financial Economics 59 (3): 413–40. DeAngelo, H., L. DeAngelo, and D. Skinner. 1992. Dividends and losses. The Journal of Finance 47 (5): 1837–63. DeAngelo, H., L. DeAngelo, and D. Skinner. 1996. Reversal of fortune: Dividend signaling and the disappearance of sustained earnings growth. Journal of Financial Economics 40 (3): 341–71. DeAngelo, H., L. DeAngelo, and R. Stulz. 2006. Dividend policy and the earned/contributed capital mix: A test of the lifecycle theory. Journal of Financial Economics 81 (2): 227–54. Dielman, T., and H. Oppenheimer. 1984. An examination of investor behavior during periods of large dividend changes. Journal of Financial and Quantitative Analysis 19 (2): 197–216. Doidge, C., G. A. Karolyi, and R. Stulz. 2004. Why are foreign firms listed in the US worth more? Journal of Financial Economics 71 (2): 205–38. Falkenstein, E. G. 1996. Preferences for stock characteristics as revealed by mutual fund portfolio holdings. The Journal of Finance 51 (1): 111–35. Fama, E. F., and K. R. French. 1993. Common risk factors in the returns on bonds and stocks. Journal of Financial Economics 33 (1): 3–56. Fama, E. F., and K. R. French. 1997. Industry costs of equity. Journal of Financial Economics 43 (2): 153–93. Fama, E. F., and K. R. French. 2001. Disappearing dividends: Changing firm characteristics or lower propensity to pay? Journal of Financial Economics 60 (1): 3–44. Fama, E. F., and K. R. French. 2005. Financing decisions: Who issues stock? Journal of Financial Economics 76 (3): 549–82. Frost, C. A., and G. Pownall. 1994. A comparison of the stock price response to earnings disclosure in the United States and the United Kingdom. Contemporary Accounting Research 11 (1): 59–83. Gelb, D. S. 2000. Corporate signaling with dividends, stock repurchases, and accounting disclosures: An empirical study. Journal of Accounting, Auditing and Finance 15 (1): 99–120. Gompers, P. A., and A. Metrick. 2001. Institutional investors and equity prices. Quarterly Journal of Economics 116 (1): 229–59. Gow, I. D., G. Ormazabal, and D. J. Taylor. 2010. Correcting for cross-sectional and time-series dependence in accounting research. The Accounting Review 85 (2): 483–512. Grullon, G., R. Michaely, S. Benartzi, and R. H. Thaler. 2005. Dividend changes do not signal changes in future profitability. Journal of Business 78 (5): 1659–82. Grullon, G., R. Michaely, and B. Swaminathan. 2002. Are dividend changes a sign of firm maturity? Journal of Business 75 (3): 387–424. Healy, P., A. Hutton, and K. Palepu. 1999. Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemporary Accounting Research 16 (3): 485–520. Healy, P., and K. Palepu. 1988. Earnings information conveyed by dividend initiations and omissions. Journal of Financial Economics 21 (2): 149–75. Healy, P., and K. Palepu. 1993. The effect of firms’ financial disclosure on stock prices. Accounting Horizons 7 (1): 1–11. Hoberg, G., and N. Prabhala. 2009. Disappearing dividends, catering, and risk. Review of Financial Studies 22 (1): 79–116. Hope, O.-K. 2003. Disclosure practices, enforcement of accounting standards, and analysts’ forecast accuracy: An international study. Journal of Accounting Research 41 (2): 235–72. Hope, O.-K., T. Kang, J. W. Kim, and R. Pereira. 2009. Voluntary disclosure practices by foreign firms cross-listed in the United States: Tests of functional convergence. Working paper, University of Toronto and Oklahoma State University. Huddart, S., and B. Ke. 2007. Information asymmetry and cross-sectional determinants of insider trading. Contemporary Accounting Research 24 (1): 195–232. John, K., and J. Williams. 1985. Dividends, dilution, and taxes: A signaling equilibrium. The Journal of Finance 40 (4): 1053–70. Karolyi, G. A. 2006. The world of cross-listings and cross-listings of the world: Challenging conventional wisdom. Review of Finance 10 (1): 99–152. King, M., and D. Segal. 2009. The long-term effects of cross-listing, investor recognition, and ownership structure on valuation. Review of Financial Studies 22 (6): 2393–421. Kothari, S. P., S. Shu, and P. Wysocki. 2009. Do managers withhold bad news? Journal of Accounting Research 47 (1): 241–76. La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R. W. Vishny. 1998. Law and finance. Journal of Political Economy 106 (6): 1113–55. Lang, M., K. Lins, and D. P. Miller. 2003. ADRs, analysts, and accuracy: Does cross-listing in the U.S. improve a firm’s information environment and increase market value? Journal of Accounting Research 41 (2): 317–45. Lang, M., and R. Lundholm. 1996. Corporate disclosure policy and analyst behavior. The Accounting Review 71 (4): 467–92. Lang, M., J. S. Raedy, and W. Wilson. 2006. Earnings management and cross listing: Are reconciled earnings comparable to U.S. earnings? Journal of Accounting and Economics 42 (1–2): 255–83. Leuz, C. 2003. Discussion of “ADRs, analysts, and accuracy: Does cross-listing in the U.S. improve a firm’s information environment and increase market value?” Journal of Accounting Research 41 (2): 347–62. Leuz, C., K. Lins, and F. Warnock. 2009. Do foreigners invest less in poorly governed firms? Review of Financial Studies 22 (8): 3245–85. Leuz, C., and R. E. Verrecchia. 2000. The economic consequences of increased disclosure. Journal of Accounting Research 38 (Supplement): 91–124. Levi, S. 2007. Voluntary disclosure of accruals in earnings press releases and the pricing of accruals. Review of Accounting Studies 13 (1): 1–21. Li, K., and X. Zhao. 2008. Asymmetric information and dividend policy. Financial Management 37 (4): 673–94. Lipson, M., C. Maquieira, and W. Megginson. 1998. Dividend initiations and earnings surprises. Financial Management 27 (1): 36–45. Merton, R. C. 1987. A simple model of capital market equilibrium with incomplete information. The Journal of Finance 42 (3): 483–510. Miller, D. P., and K. Rock. 1985. Dividend policy under asymmetric information. The Journal of Finance 40 (4): 1031–51. Miller, M., and F. Modigliani. 1961. Dividend policy, growth and the valuation of shares. Journal of Business 34 (4): 411–33. Mitra, D., and J. E. Owers. 1995. Dividend initiation announcement effects and the firm’s information environment. Journal of Business Finance and Accounting 22 (4): 551–73. Myers, S. C. 1984. The capital structure puzzle. The Journal of Finance 39 (3): 575–92. Nissim, D., and A. Ziv. 2001. Dividend changes and future profitability. The Journal of Finance 56 (6): 2111–33. O’Brien, P., and R. Bhushan. 1990. Analyst following and institutional ownership. Journal of Accounting Research 28 (1): 55–76. Petersen, M. A. 2009. Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies 22 (1): 435–80. Piotroski, J. D., and S. Srinivasan. 2008. Regulation and bonding: The Sarbanes-Oxley Act and the flow of international listings. Journal of Accounting Research 46 (2): 383–425. Roulstone, D. 2003. Analyst following and market liquidity. Contemporary Accounting Research 20 (3): 551–78. Stulz, R. M. 1999. Globalization, corporate finance, and the cost of capital. Journal of Applied Corporate Finance 12 (3): 8–25. Walther, B. 1997. Investor sophistication and market earnings expectations. Journal of Accounting Research 35 (1): 157–80. Citing Literature Volume29, Issue2Summer 2012 (June)Pages 403-431 ReferencesRelatedInformation