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Authors Tao Wang, Chen-Yang Tsai, Pei-Shih Weng & Yi-Wei Chuang Pages 105–130 Keywords Corporate governance, Cash dividends, Dividend announcement effects, Event study |
How to Cite Wang, T., Tsai, C.-Y., Weng, P.-S., & Chuang, Y.-W. (2025). Examining the information content of cash dividend announcements through corporate governance. Management Review, 44(2), 105–130. https://doi.org/10.6656/MR.202504_44(2).ENG001
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Abstract
Purpose – This study investigates how corporate governance impacts the effects of dividend announcements, aiming to clarify whether agency theory or signaling effect better explains the informational content of dividend announcements.
Design/methodology/approach – A corporate governance index was established using a sample of listed companies in Taiwan. The event study method was employed to estimate abnormal returns following dividend announcements.
Findings – The stock market responds positively to dividend announcements, and strong corporate governance enhances this effect, supporting the signaling effect perspective. Subsample analyses based on information transparency, analyst disagreement, stock turnover rate, and economic conditions further validate these findings.
Research limitations/implications – This research introduces a novel application of how corporate governance influences the efficacy of corporate decisions, analyzing data solely from Taiwan. Future studies could extend this comparison across markets for broader insights.
Practical implications/Social implications – The study clarifies the theoretical mechanisms behind the effects of dividend announcements and highlights the importance of corporate governance in dividend policy for investors and management.
Originality/value – By developing a corporate governance index for Taiwanese companies and understanding its impact on dividend announcement effects, this research offers new insights into the intersection of corporate governance and dividend studies.