Transformations  in
Business & Economics

SHAREHOLDERS' PREFERENCES, BUSINESS CYCLES AND MARKET REACTIONS TO DIVIDEND ANNOUNCEMENTS IN PUBLIC COMPANIES - EMPIRICAL EVIDENCE
Agnieszka Perepeczo

ABSTRACT.The effect of corporate decisions concerning profit distribution on the market value of a company has been addressed by numerous empirical studies. Observations carried out in developed markets show that dividend initiation decisions result in an increase of abnormal returns. The main objective of this paper is to present results of shareholders' reaction to the dividend initiation decisions and an impact of market cycles on the Warsaw Stock Exchange (WSE). At the beginning, a review of similar studies is made. Next, the sample selection and methodology were discussed. The shareholders' reactions for the whole sample were positive but abnormal returns under two models were different and not homogeneous in the event window (-60, +60). In the case of over 45% of dividend initiations the reaction was negative. Moreover, the author have indicated that observed market business cycles may influence shareholders' reactions and abnormal returns

KEYWORDS: dividend policy, event study, abnormal returns, Poland.

JEL classification: G35, G14, G32.