Finance Discipline Group
UTS Business School
University of Technology, Sydney

Working Paper Series

Australian Tax Changes and Dividend Reinvestment Announcement Effects: A Pre- and Post-Imputation Study
Author(s): Keith Chan, D McColough and Michael Skully
Date of publication: April 1992
Working paper number: 16
This paper used an event study approach to examine the impact of dividend reinvestment plans on shareholders returns in the pre- and post-imputation environment. The daily share return behaviour indicated that the announcement to introduce DRP was received indifferntly by the market prior to the imputation, but was valued positively afterwards. The results support the suggestion that under imputation the optimal dividend policy is to distribute the maximum franked dividend and implement a DRP to retain cashflows.
Paper: Download (Format: PDF, Size: 359 Kb)
Published as: Chan, K. K.W., McColough, D. M. and Skully, M. T. 1993, "Australian Tax Changes and Dividend Reinvestment Announcement Effects: A Pre- and Post-Imputation Study", Australian Journal of Management, 18(1), 41-62.
Known citations:

Chan, K. K. W., McColough, D. W. and Skully, M. T. 1996, "Australian Dividend Reinvestment Plans: An Event Study on Discount Rates", Applied Financial Economics, 6(6), 551-561.

Faff, R., Hillier, D. and Wood, J. 2000, "Beta and Return: Impications of Australia's Dividend Imputation Tax System", Australian Journal of Management, 25(3), 245-260.

Lasfer, M. A. 1997, "On the Motivation for Paying Script Dividends", Financial Management, 26(1), 62-80.

Manigart, S. and De Waele, K., 1999, "Choice Dividends and Contemporaneous Earnings Announcements on a Small Stock Market: An Empirical Study", Cahiers Economiques de Bruxelles, 161, 27-56.

Murray, J. S., 2012, "Framing and Disposition Effects in Stockholders' Dividend Preferences", Working Paper.