STOCK-PRICE REACTIONS TO DIVIDEND AND EARNINGS ANNOUNCEMENTS - CONTEMPORANEOUS VERSUS NONCONTEMPORANEOUS ANNOUNCEMENTS

In this paper we examine stock price reactions to contemporaneous and noncontemporaneous dividend and earnings announcements. Overall, the stock price reaction to joint announcements is significantly greater than the reaction to just one signal. This implies that there is information content to two signals being given simultaneously, and that announcements are not perfect substitutes. Some evidence shows that the reaction to a joint announcement is approximately twice that to a noncontemporaneous announcement. On average, the stock price reaction to joint contradictory announcements is not significant. Finally, for joint announcements where only one of the two announcements. is expected to affect the stock price significantly, the market reaction is determined by the nonzero signal.