Question:vi. Discuss the relevant theory (Information content (signalling) hypothesis,Free cash flow hypothesis ,Clientele effect )with the findings in (iv) and (v).
(iv)
SFC company Final dividend change 14.00-13.00=1.00 Three days excess return=7.14%-0.84%=6.3% Two days excess return=10.13%-0.40%=9.73%
(v)
SNL company
Final dividend change=3-4.25=-1.25 Three days return excess: -1.21%+1.21%=0 Two days return excess: -1.21%-0=-1.21%
OGC company
final dividend=1-2=-1 three days return excess= -6.02% -2.39% = -8.41% two days return excess= – -7.47% – 0.19% = -7.66%
