Dividend payout policy and acquirors' announcement returns

Abstract

The examination of value-creating properties for acquirors is plenty in prior research. However, the relationship between acquirors’ dividend payout policies and announcement returns during mergers and acquisitions events has received marginal attention. Consistent with the findings of Glambosky et al. (2020), this thesis presents evidence of a positive relation between dividend paying acquirors and cumulative abnormal returns for European public, listed companies. The similarity of the acquiror and the target dividend payout policies are also shown to have a significant relation, although negative. Due to the endogenous nature of dividend payout policy, the thesis limits its enquiry to only studying the similarity of dividend policies, however, a proposal is made for the future consideration of the implications of dividend tax incidence for acquiror dividend clientele.