Title: Trading volume reaction around dividend initiation announcements: a corporate governance perspective

Authors: Obaid AlMotairy; Skandar Lazrak; Samir Trabelsi

Addresses: College of Business and Economics, Qassim University, Al Qassim, Saudi Arabia ' The Goodman School of Business Brock University, 500 Glenridge Av. St. Catharines, Ontario L2S 3A1, Canada ' The Goodman School of Business Brock University, 500 Glenridge Av. St. Catharines, Ontario L2S 3A1, Canada

Abstract: The study investigated the relationship between trading volume reaction around first dividends initiation. We use a sample of 546 public US firms that initiated first dividend between 2003 and 2012. Our results show that corporate governance has a significant association with trading volume reaction. These results suggest that that poor governance will increase the trading volume. In contrast, trading volume reaction does not relate to dividend payment, dividend yield and holding period return directly. Taken together our results suggest that poor governance induce investor heterogeneous belief around first dividend initiation. Our paper contributes to the growing literature on the cross sectional determinants of trading volume at the first dividend initiation.

Keywords: corporate governance; trading volume reaction; first dividend initiation; dividend policy; capital markets; event study; USA; United States.

DOI: 10.1504/IJAUDIT.2016.081996

International Journal of Auditing Technology, 2016 Vol.3 No.2, pp.150 - 162

Received: 23 Nov 2015
Accepted: 16 Mar 2016
Published online: 31 Jan 2017 *

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