Dividend reductions, the timing of dividend payments and information content

► Dividend reductions that are not associated with contemporaneous repurchase activities are related to future abnormal earnings. ► It provides strong support for the information content of dividend reductions. ► The market generally reacts negatively to dividend reductions. ► The price reaction is negatively related to the reduction in imputation tax credit. ► The percentage of dividend reduction is stronger for interim than for final dividend reductions.