Stock distributions can affect the number of outstanding shares and the equity structure of a firm. From a neoclassical perspective, neither should have any effect on market value. However, a respectable number of empirical studies disclose overwhelming evidence that stock markets have a significantly positive reaction to the announcement of stock distributions. Despite the broad consensus about the positive market reaction, the possible causes are still debated. Focusing on stock dividends, which are a special type of stock distribution, this study revisits this puzzle and provides deeper insight into the economic ramifications of changes in the equity structure.

Inhalt
I Introduction II Regulatory Framework Basic Conditions Further Legal Implications Conclusions III Theory and Empirical Evidence Theoretical Considerations on Stock Distributions Empirical Evidence IV Data and Methodology Descriptive Data Event Study Design Proxy for Jensen's Free Cash Flow V Data Analysis Announcement Effect of Stock Dividends Test of the Free Cash Flow Hypothesis VI Conclusions Appendices References