Abstract
This study examines the impact of special dividend announcements in a partial imputation tax environment in the UK. We find that the market reaction is positive. The price reaction is negatively related with growth opportunities and positively related with pre-announcement cash flow and size of the special dividend. Abnormal future operating performance is positively related with growth opportunities for the year ended after the announcement and the year after, and is positively related with the size of the special dividend for the year ended after the announcement and insignificantly related thereafter. Overall, our findings support the conclusion that in a partial imputation tax environment, managers use special dividends both to signal future performance for firms with high growth opportunities and to reduce agency costs for firms with low growth opportunities.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
