The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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A Theory of Stock Price Responses to Alternative Corporate Cash Disbursement Methods: Stock Repurchases and Dividends
Published: 06/01/1987 | DOI: 10.1111/j.1540-6261.1987.tb02572.x
AHARON R. OFER, ANJAN V. THAKOR
This paper develops a model in which managers can signal their firms' true values by using either a dividend or a stock repurchase or both. The authors explain a number of stylized facts about these cash‐disbursement mechanisms, particularly those concerning the relative magnitudes of stock price responses to dividends and repurchases. Most importantly, they explain why a stock repurchase elicits a significantly higher price response, on average, than a dividend announcement.
“Bond Refunding Reconsidered Reply”
Published: 03/01/1980 | DOI: 10.1111/j.1540-6261.1980.tb03483.x
AHARON R. OFER, ROBERT A. TAGGART
Corporate Financial Policy, Information, and Market Expectations: An Empirical Investigation of Dividends
Published: 09/01/1987 | DOI: 10.1111/j.1540-6261.1987.tb03918.x
AHARON R. OFER, DANIEL R. SIEGEL
This paper documents a relationship between announcements of unexpected changes in financial policy and unexpected changes in performance of the firm. Using a new methodology that combines analysis of stock price movements and earnings forecast data, the authors provide evidence that analysts revise their earnings forecasts following the announcement of an unexpected dividend change by an amount positively related to the size of the unexpected dividend change. They also provide evidence that these revisions are positively related to the change in equity value surrounding the announcement. Further, they find that these revisions are consistent with rationality. Their results therefore provide direct evidence consistent with the hypothesis that unexpected dividend changes signal information about firm performance to market participants.
Real Interest Rates and Inflation: An Ex‐Ante Empirical Analysis
Published: 03/01/1996 | DOI: 10.1111/j.1540-6261.1996.tb05207.x
SHMUEL KANDEL, AHARON R. OFER, ODED SARIG
We develop a method of measuring ex‐ante real interest rates using prices of index and nominal bonds. Employing this method and newly available data, we directly test the Fisher hypothesis that the real rate of interest is independent of inflation expectations. We find a negative correlation between ex‐ante real interest rates and expected inflation. This contradicts the Fisher hypothesis but is consistent with the theories of Mundell and Tobin, Darby and Feldstein, and Stulz. We also find that nominal interest rates include an inflation risk premium that is positively related to a proxy for inflation uncertainty.