Earnings and Dividend Announcements: Is There a Corroboration Effect?
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- Author(s): ALEX KANE, YOUNG KI LEE, ALAN MARCUS
- Published: Apr 30, 2012
- Pages: 1091-1099
- DOI: 10.1111/j.1540-6261.1984.tb03894.x
We examine abnormal stock returns surrounding contemporaneous earnings and dividend announcements in order to determine whether investors evaluate the two announcements in relation to each other. We find that there is a statistically significant interaction effect. The abnormal return corresponding to any earnings or dividend announcement depends upon the value of the other announcement. This evidence suggests the existence of a corroborative relationship between the two announcements. Investors give more credence to unanticipated dividend increases or decreases when earnings are also above or below expectations, and vice versa.