An analysis of the significance of information content in dividend announcements: The case in Indonesia

Abstract

This research aims at examining the significance of the information content in dividend announcements, using the Indonesian context. The sample of this research consists of dividend announcements during 2006-2012 periods. The result of this research shows that the market reacts positively to the dividend increase announcements. Investors perceive that a dividend increase is good news, thus they react positively. Indonesian investor react negatively to the dividend decrease announcement. A dividend decrease is bad news, thus they react negatively. On the other hand, investors do not react to the no-change dividend announcement. These results show that dividend announcements in Indonesia contain significant information for the investors.