Furthermore, we find a significant relation between insider trading activity and the market reaction to the announcement of acquisitions. We conclude that information asymmetry exists in the takeover market and it influences the payment method decision. Forthcoming Winter 1999. Abstract We test the hypothesis that the information content of dividend change announcements, as reflected in stock prices, is directly related to the degree of pre-announcement information asymmetry in the stock. The dividend change announcements include initiations, large increases, large decreases, and omissions.
Information asymmetry is proxied by the proportion of stock held by institutions.
This finding appears to hold for all types of dividend changes except dividend omissions. Forthcoming Winter 1999. We test the hypothesis that the information content of dividend change announcements, as reflected in stock prices, is directly related to the degree of pre-announcement information asymmetry in the stock. The dividend change announcements include initiations, large increases, large decreases, and omissions. Information asymmetry is proxied by the proportion of stock held by institutions.