Question
Suppose that you have performed an event study to examine whether extra dividend payout affects firm values. After aggregating the abnormal returns, you obtained (1,2)=0.024CAR(s1,s2)=0.024,
Suppose that you have performed an event study to examine whether extra dividend payout affects firm values. After aggregating the abnormal returns, you obtained (1,2)=0.024CAR(s1,s2)=0.024, and ((1,2)=0.0002Var(CAR(s1,s2)=0.0002, where (s1, s2) is from the event window. Can you reject the null hypothesis 0:(1,2)=0H0:CAR(s1,s2)=0 at 10% significance level? What is your conclusion then? The critical values are +-1.65 at 10% significance level.
Select one:
a)
I reject the null hypothesis. I conclude that extra dividend payout affects firm values.
b)
I do not reject the null hypothesis. I conclude that extra dividend payout does not affect firm values.
c)
I reject the null hypothesis. I conclude that extra dividend payout does not affect firm values.
d)
I do not reject the null hypothesis. I conclude that extra dividend payout affects firm values.
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