Date of Award
Frank W. Bacon, Ph.D.
The purpose of this study is to test the semi-strong form efficient market hypothesis by analyzing the effects of increased dividend announcements on stock price. Specifically, is it possible to earn an above normal return on a publicly traded stock when the firm announces an increased dividend? Numerous past studies suggest that with a company's increased dividend announcement goes a positive signal about the firm's future, thereby significantly increasing the firm's stock price. Likewise, the positive signal implies that the firm now attracts a new breed of investors, thus driving up demand for the firm's stock. According to the semi-strong form efficient market hypothesis, it is not possible to consistently outperform the market - appropriately adjusted for risk - by using public information such as increased dividend announcements. This type of information should impound stock price sufficiently fast to disallow any investor's earning an above normal risk adjusted return. Evidence here supports the positive signal associated with the sample of increased dividend announcements examined. Likewise, the study results support the semi-strong form efficient market hypothesis.
Laabs, Douglas S., "THE IMPACT OF INCREASED DIVIDEND ANNOUNCEMENTS ON STOCK PRICE: A TEST OF MARKET EFFICIENCY" (2013). Theses, Dissertations & Honors Papers. 146.