Master Limited partnerships: An examination of changes in dividend distribution policy.

This paper examines the impact of dividend distribution decrease announcements on the security prices of master limited partnerships. (MLPs). These firms, whose earnings are not subject to U.S. Federal Income Tax are marketed stressing high dividend yields. Since most MLPs are natural resource firms with only one line of business, cuts in dividend policy by one firm caused by industry-wide factors might impact the market's pricing of similar firms. Therefore, tests of announcement effects are performed not only on the firm itself but also on a portfolio of related firms. Although the announcements were found to be associated with significant unit price reactions for the MLP making the announcement, the price reaction for similar firms was small, indicating only weak support for intraindustry information transfers. [ABSTRACT FROM AUTHOR]