Complementarity of Prior Accounting Information: The Case of Stock Dividend Announcement.

Key Points

• To investigate how prior accounting information influences market reactions to stock dividend announcements.
• Analyzed market responses using historical data on stock dividend announcements and prior accounting metrics.
• Examined cross-sectional variations in investor reactions based on different accounting disclosures.
• Evaluated the significance of capital expenditure, retained earnings, funds from operations, and dividend history.
• Prior accounting information significantly explains variations in market responses.
• The analysis indicates that disclosures about dividend history and retained earnings are particularly influential.
• Investors utilize accounting metrics effectively to gauge the implications of stock dividend announcements.