Answer on Finance Question for Hassan Mortada
changes. In addition, firms that repeatedly change dividends to signal the
market establish a reputation with the market, and the reputation that the firm
establishes may be good, bad, or otherwise. In assuming that dividend changes
signal to the market management's knowledge of the expected level of a firm's
earnings, this study attempts to classify firms by their level of reputation
and to measure market response to dividend changes announced by firms in
different reputation classes.
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