Which of the following is true of equity returns at the time of dividend announcements?

Question

Quizplus · Accepted Answer

Dividend announcements often serve as signals to the market about a company's financial health and future prospects. When earnings predictions are also released simultaneously, these can overshadow the signalling effect of dividend changes, making the dividends less informative or predictive about the company's future. This is because investors may focus more on the direct financial performance indicators provided by earnings forecasts than on the implications of dividend changes.

Which of the Following Is True of Equity Returns at the Time