Stock Price Response to Dividend Announcements : (Evidence from National Stock Exchange, India)

Authors

  •   Smita Jesudasan St Francis Institute of Management and Research, Borivali (W), Mumbai, 103
  •   Darren Brito Alumnus, Department of Business Administration, St Joseph Engineering College, Vamanjoor, Mangalore — 28

Abstract

The impact of dividend announcements on the share prices has been studied by many researchers. Majority of the studies have revealed that dividend change announcements have a positive association with share returns in the period around the dividend announcement. This study adds to the literature focusing on the shareholders reactions to the dividend announcements. Average Abnormal Returns (AAR) and Cumulative Average Abnormal Returns (CARR) for 30 days prior to the dividend announcement and 30 days post the dividend announcement has been computed using Market Model (MM), Market Adjusted Model (MAM), Mean Adjusted Model (MeAM) and Raw Model (RM) for Interim Dividend Announcements, Final Dividend Announcements and the combination of Interim&Final Dividend Announcements for a period of 4 years from calendar year 2010 to 2013. The findings have confirmed that Dividend announcements affect the returns and the Indian market is inefficient in its semi-strong form.

Downloads

Download data is not yet available.

Downloads

How to Cite

Jesudasan, S., & Brito, D. (2016). Stock Price Response to Dividend Announcements : (Evidence from National Stock Exchange, India). SFIMAR Research Review, 10(1), 48–61. Retrieved from https://sfimar.srels.org/index.php/srr/article/view/86571

Issue

Volume 10, Issue 1, 2015

Section

Articles

References

Capitaline Databases, (n.d.). Corporate database. Retrieved June 18, 2014 from Capitaline, Databases: http://www.capitaline.com.

Chander, R., Sharma, R., & Mehta, K. (2007). Dividend announcement & Informational efficiency: An empirical study of Indian stock market. The ICFA1 Journal of Applied Finance, 13,29-42.

Dasilas, A., Lyroudi, K., & Ginoglou, D. (2008). Joint Effects of Interim Dividends and Earnings Announcement in Greece. Studies in Economics and Finance, 25 (4), 212-232.

Fama, E. F. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, 25 (2), 383-417.

Gunasekarage, A., & Power, D. M. (2006). Anomalous Evidence in Dividend Announcement Effect. Managerial Finance, 32 (3), 209-226.

Iqbal & Mallikarjunappa, T. (2008). An Empirical Testing Of Semi-Strong Form Efficiency Of Indian Stock Market. The Journal of Amity Business School, 9 (1), 24-33.

Kumar, S. & Raju, G. (2013). Does the Dividend Announcement matter in the Indian Stock Market? Asia Pacific Journal of Management Research and Innovation, 9(1), 1-7.

Maitra, D. & Dey, K. (2012). Dividend Announcement and Market Response in Indian Stock Market: An EventStudy Analysis. Global Business Review, 13 (2), 269-283.

Mallikarjunappa, T &Manjunatha;,T. (2009). The stock price reaction to dividend announcements. Journal of Management & Public Policy, 1 (1), 43-56.

Mehta, C , Jain, RK. & Yadav, S.S. (2014). Market Reaction to Stock Dividends: Evidence from India. Vikalpa 39 (4), 55-74.

Seghal, S. & Bijoy, K. (2015). Stock Price Reactions to Earnings Announcements: Evidence from India. Vision: The Journal of Business Perspective, 19 (1), 25-36.

Sharma, J. & Singh, S. (2009). Market Reaction to Bonus Issues in the Indian Stock Market. As/a Pacific Journal of Management Research and Innovation, 5 (3), 56-62.

Sharma, R. & Chander, R. (2009). Earnings Behaviour and Stock Price Behaviour on Indian Stock Markets. Asia Pacific Journal of Management Research and Innovation, 5 (3), 117-126.