Ownership Structure and the Credibility of Special Dividend Signal: Evidence from Imputation Environment

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This study examines the role of ownership structure in validating the credibility of special dividend signal in the absence of a double taxation of dividends in a full imputation environment. Using a sample of Australian special dividend announcements from January 1996 to June 2002, we document positive price reactions to special dividend announcements. Furthermore, we find that insider ownership, outsider ownership, the presence and concentration of large shareholders, and family blockholdings are all positively related to special dividend announcement effects. As such, this paper provides considerable support for the notion that ownership structure affects the credibility of the signal and results in greater announcement effects.