Significance of a change in dividend payment frequency

Abstract

The objective of this paper is to analyse the significance of a change in dividend payment frequency. We initially argue that a change in dividend payment frequency is significant and relevant in the same manner as a change in dividend policy. We analyse the subject using an event study of Sechaba Holdings, a firm listed on the Botswana Exchange` that decided to change its dividend payment frequency from quarterly to bi-annual payment to examine the subject. We specifically used an event study methodology that analyses the significance of abnormal returns that occurred during the event period. The study revealed that the firm’s decision to change its dividend payment frequency did not significantly affect abnormal returns during the event period.  The study therefore contradicted our initial argument that a change in dividend payment frequency is significant and relevant.