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We examine the role of institutional investors’ investment horizon on the information content associated with dividend announcement surprises in the “dividend-reappearance era”. We find that the presence of institutional investors negatively affects the announcement period cumulative abnormal return (CAR), which suggests that institutional investors reduce information content of dividend announcements. This result is primarily driven by the fact that institutional investors, especially the not-short-horizon investors, do not prefer dividend surprises – which leads to lower announcement period CAR. We do not find support for institutional investors’ informed trading argument. Our study reveals that in order to understand the dynamics between institutional ownership and information content of dividend announcement, it is important to distinguish the institutional investors’ investment horizons.


Authors' version of the article is available here.

The final copy is published as:

Amin, Abu S. et al. "Institutional Shareholding and Information Content of Dividend Surprises: Re-examining the Dynamics in Dividend-Reappearance Era." Journal of Corporate Finance 31 (2015): 152–170.