DIVIDEND ANNOUNCEMENTS AND THE ABNORMAL STOCK RETURNS FOR THE EVENT FIRM AND ITS RIVALS

2012 ◽  
Vol 01 (08) ◽  
pp. 72-76
Author(s):  
Muhammad Aamir ◽  
Syed Zullfiqar Ali Shah
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Oil And Gas ◽  
Positive Impact ◽  
Theoretical Background ◽  
Study Data ◽  
Share Prices ◽  
Dividend Announcements ◽  
Abnormal Stock Returns ◽  
Rival Firms

Impact of dividend announcement on stock prices is pronounced in various studies conducted by various researchers. Event study has been conducted in this paper on 26 announcements and the firms were belonging to cement and oil and gas sector of Pakistan. In this study data span of 2004-2008 has been covered. Impact of dividend announcement on stock prices of event and rival firms has been analysed and it has been found that dividend announcement depicts positive impact on share prices of the companies at the time of announcement as well as immediately after such announcements. Performance of event firms has been evaluated in comparison with its rival firms in this study in order to give better understanding of dividend announcement effect on the financial health of the companies. Overall, our results robust the findings of earlier research and as per theoretical background of the study. Our conclusion explains the significance of t-statistics values during this study.

scholarly journals Impact of splits on stock splits ratios around announcement day: empirical evidence from India

2020 ◽  
Vol 17 (3) ◽  
pp. 345-359
Author(s):  
Anjali Gupta ◽  
Purushottam Kumar Arya
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Stock Splits ◽  
P Value ◽  
Share Prices ◽  
Stock Split ◽  
Percentage Basis ◽  
The Impact

Stock split should not have any impact on share prices, and there should be no value creation. The purpose of this study is to find any impact of stock splits announced in India between 1999 and 2019 on stock returns. The study aims to find differences in the impact of stock splits on stock returns with differences in stock split ratios. To examine the impact, the study includes 224 splits and adopts the standard event study methodology to find results. The presence of an abnormal return around split announcement day is the main factor, which determines the impact of stock split on the stocks. Average Abnormal Returns and Cumulative Average Abnormal Returns on percentage basis, z-test and p-value are used to statistically analyze the impact on stock prices around the announcement day of splits. These tests are used across different window periods (e.g., 20 days, 10 days and 5 days) around the event day (announcement day) to check if the impact of the event continues or decreases over time. The results point to a significant positive impact of stock splits on the returns of stock around the day the split was announced. The results also show that the impact is stronger for stock splits with ratios 10:1 (2.72 percent) and 10:2 (2.14 percent). It can be suggested that 10:1 and 10:2 are the most popular split ratios that receive maximum ongoing response to splits in the announcement window.

An Analysis of the Impact of Demonetization on Stock Prices and Quarterly Performance of BSE 50 Companies

2018 ◽  
Vol 6 (11) ◽  
pp. 65 ◽  
Author(s):  
Vandana Gupta ◽  
Utsav Asher ◽  
Hunny Jain
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Positive Impact ◽  
Indian Government ◽  
Market Capitalization ◽  
Test Methodology ◽  
Abnormal Stock Returns ◽  
Study Methodology ◽  
The Impact ◽  
Event Study Methodology

The objective of this study is to analyze the impact of demonetization by the Indian government on the stock prices of top 50 BSE companies (based on market capitalization). The authors use event study methodology to calculate abnormal stock returns up to 20 days post-demonetization. It is observed that 54 percent of the companies showed positive impact to demonetization in their stock prices up to the 20th day post demonetization. The quarterly performance of these top 50 companies is analyzed by segregating these 50 companies across 6 sectors and paired sample t-test methodology is applied to assess the quarterly performance pre and post demonetization. Although there have been several viewpoints expressed on demonetization as theoretical and conceptual articles, to the best knowledge of the authors this is the first paper that does an empirical analysis on the top 50 companies by market capitalization for the effect of demonetization.

Studying the Effect of Changing the Managing Director on the Abnormal Returns of Shares of Companies Listed on the Iraqi Stock Exchange

2021 ◽  
Vol 39 (11) ◽  
Author(s):  
Hussein Hasan ◽  
Hudaa Nadhim Khalbas ◽  
Farqad Mohammed Bakr AL Saadi
Keyword(s):  
Stock Returns ◽  
Significant Relationship ◽  
Stock Prices ◽  
Market Reaction ◽  
Stock Exchange ◽  
Hypothesis Test ◽  
Abnormal Returns ◽  
The Other ◽  
Other Hand ◽  
Abnormal Stock Returns

The aim of this research is to study the market reaction to the change of the managing director and how this change affects the abnormal returns of the shares. The research is based on the information published by the companies listed on the Iraq Stock Exchange, and 35 companies were selected for the period from 2015 to 2019. The results of the hypothesis test for this study show that there is a negative and significant relationship between the change of the managing director and abnormal stock returns. On the other hand, investors undervalue stock prices when changing CEOs. As a result, the stock returns are less than expected.

The cost of presidential impeachment to politically connected firms

2019 ◽  
Vol 21 (2) ◽  
pp. 109-121
Author(s):  
Ha Na Lee ◽  
B. K. Song
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Stock Price ◽  
Constitutional Court ◽  
Korean History ◽  
South Korean ◽  
Price Data ◽  
Political Events ◽  
Abnormal Stock Returns ◽  
The Cost

AbstractThis study examines the ways political events can affect the stock prices of politically connected firms by studying one of the biggest corruption scandals in modern South Korean history, which led to the first-ever impeachment of a sitting president. We analyzed the stock returns of firms that donated money to foundations allegedly controlled by the president's confidante. We found that the abnormal stock returns of politically connected firms decreased when the president was removed from office. Using tick-by-tick stock price data, we were able to pinpoint the exact moments when the stock prices of firms that donated money fluctuated, as the president's fate was determined by the justices of the Constitutional Court.

Dividend Buying: Linking Dividend Announcements and Ex-Dividend Day Effects

1995 ◽  
Vol 10 (3) ◽  
pp. 421-435 ◽  
Author(s):  
Helen M. Bowers ◽  
Donald Fehrs
Keyword(s):  
Stock Returns ◽  
Trading Volume ◽  
Abnormal Returns ◽  
Investment Strategy ◽  
Short Term ◽  
Return Variance ◽  
Dividend Announcements ◽  
Abnormal Volume ◽  
Abnormal Stock Returns ◽  
Short Term Investment

We provide a plausible explanation for earlier findings that positive abnormal stock returns associated with dividend announcements persist for several days and that abnormal volume and stock returns commence several days before a stock's ex-dividend day. This study links these two sets of findings to the short-term investment strategy of dividend buying by relating the abnormal returns and trading volume to individual stock characteristics favored by dividend buyers, namely the stock's return variance and dividend yield. We conclude that dividend buying is at least partially responsible for the abnormal returns and volume found between dividend announcement and ex-dividend days.

scholarly journals Dividend Announcements of Banking Sector in Gulf Area; Pre, During and Post the Recent Global Financial Crisis

2018 ◽  
Vol 10 (6) ◽  
pp. 20
Author(s):  
Bassam Jaara ◽  
Mahmoud Dalou
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Positive Impact ◽  
Emerging Countries ◽  
Share Prices ◽  
Gcc Countries ◽  
Event Study Method ◽  
Dividend Announcements ◽  
The Global Financial Crisis

This research aims to analyze the movement of dividend policy announcements impact on share prices, and the performance of all listed banks in Gulf area pre-during-post the financial crisis. This research has positioned and utilized event study method, and dividend pay-out ratio to evaluate the movements in share prices of two event windows for 65 banks (All listed banks) from 2005 to 2013. The main results for this research showed that there is a strong signaling effect since most of the windows show positive impact of dividend announcements on the CAARS. Likewise, there can be equally significant lifecycle impact since the large banks show different pay out pattern as compared with the small banks. Moreover, there has been steady dividend pay by banks at an average even in the crisis periods. In addition, a proportion of payers have increased as compared to the non-payers over years, which is related to both life cycle and competition theories. The last finding presents that banking sector in the GCC countries have not been affected like other emerging countries during the global financial crisis, because they supported by oil prices.

Does Credit Rating Revisions Affect the Price of Common Stock: A Study of Indian Capital Market

2021 ◽  
pp. 227853372110335
Author(s):  
Gaurav Dawar ◽  
Shivangi Bhatia ◽  
Jai Parkash Bindal
Keyword(s):  
Stock Returns ◽  
Capital Market ◽  
Stock Return ◽  
Credit Rating ◽  
Stock Exchange ◽  
Critical Factor ◽  
Event Window ◽  
Share Prices ◽  
Abnormal Stock Returns ◽  
Rating Changes

The current investigation aims to assess the effect of credit assessment changes on the share prices of Indian companies from 2009 to 2019. The data of top 100 companies listed on National Stock Exchange (NSE) across 10 industries stem from CMIE databases. The excess stock return is compared with the market in a 15-day window around credit rating changes. The event effect on share prices is more in the pre-event window compared to the post-event window. Positive abnormal stock returns around upgrades through downgrades are statistically significant compared to upgrades. Credit ratings are not significant across industries, and agency nationality is a critical factor for calculating the intensity of price reaction.

Price Behaviour Around Dividend Announcements in the Indian Equity Market in the Existence of Corporate Dividend Tax

2017 ◽  
Vol 18 (2) ◽  
pp. 402-415 ◽  
Author(s):  
Chanchal Chatterjee ◽  
Paromita Dutta
Keyword(s):  
Stock Returns ◽  
Firm Size ◽  
Stock Exchange ◽  
Emerging Market ◽  
Market Model ◽  
Cash Dividend ◽  
Developed Economies ◽  
Dividend Announcements ◽  
Abnormal Stock Returns ◽  
Dividend Tax

This article empirically examines the price behaviour around cash dividend announcements of the firms listed on the National Stock Exchange of India Ltd (NSE) in order to understand whether dividend announcements really influence stock returns in the market and carry meaningful information to the investors in the existence of corporate dividend tax. The article uses standard ‘event study’ methodology based on market model on a sample of 210 dividend announcements. Subsample analysis is employed for further analysis of firms of different categories. The study finds that cash dividend announcements do not necessarily generate abnormal stock returns in an emerging market, such as India. The whole sample is further divided into various subsamples on the basis of firm size and the size of payout ratio. The study finds that large payout firms experience greater stock returns compared to the smaller payout firms just after the dividend announcements. However, stock returns following dividend announcements do not vary across firm size. This article provides evidence to the managers about the non-linkage between cash dividend announcements and stock returns in an emerging market like India. This finding is contrary to the findings of many other studies that are based on the data of the developed economies.

scholarly journals The Impact of Disclosure Sentiment on the Share Prices of Russian Companies

2021 ◽  
Vol 15 (2) ◽  
pp. 5-15
Author(s):  
Maksim Kopyrin ◽  
Iuliia Naidenova
Keyword(s):  
Stock Prices ◽  
Information Disclosure ◽  
Stock Price ◽  
Positive Impact ◽  
News Item ◽  
Marginal Effect ◽  
Share Prices ◽  
Stock Price Reaction ◽  
Tone Level ◽  
The Impact

Information about companies published in a news feed is invariably tinted by emotional tonality. As such, resultingperceptions may influence the opinion of market players, and consequently affect the dynamics of a company’s shareprice. This study aims to evaluate various hypotheses about the impact of the tone of news items regarding dividends,capital expenditures, and development on the stock prices of Russian companies. Information disclosure is extensivelystudied, and there have been limited studies on the effect of disclosures on Russian companies. However, until now, therehave been no research studies which verify hypotheses on the influence of news sentiment on corporate share prices inthe Russian market. This analysis was conducted using data from 49 Russian public companies included in the Moscow exchange indexover the period from the end of 2017 to the beginning of 2019. To account for the proximate impact of news items onconsequential market phenomena, an event study methodology was applied in order to estimate and construct themodels of dependency of cumulative abnormal return (CAR) on news tone level, and control for financial and nonfinancialfactors. Our results provide evidence for the positive impact of the tone of news texts on the share prices of Russian companies.The increase in news tone by one standard deviation leads to a cumulative abnormal stock return increase of 0.26percentage points. This result is consistent with previous research conducted on data from developed stock markets.Moreover, the relationship between the tone or sentiment level of a news item and the stock price reaction is linear,without the diminishing marginal effect. Our conclusions should prompt companies to invest effort in delivering information in a tonally positive way,highlighting the most positive news. Investors, in turn, should rationally approach the interpretation of publishedinformation.

scholarly journals Use Of Earnings Information For Stock Pricing In Different Market Cycles: The Effect Of Discretionary Accruals

2011 ◽  
Vol 7 (5) ◽  
Author(s):  
Alireza Daneshfar ◽  
Mohammad J. Saei
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Stock Prices ◽  
Discretionary Accruals ◽  
Ratio Analysis ◽  
Test Results ◽  
Font Size ◽  
True Nature ◽  
Earnings Information ◽  
Abnormal Stock Returns

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">This study examines the association between stock prices and discretionary accruals in different stock market cycles and presents evidence about the discrepancy in prior research that investors were able to identify earnings management in some cases, but not in some other cases. We argue that investors&rsquo; reaction to the true nature of EPS changes may be different in different market cycles. We suggests that investors pay less attention to the nature of EPS changes in an optimistic cycle, and are more critical in neutral and pessimistic cycles. Therefore, investors are more likely to detect and count for any earnings management in a neutral or pessimistic cycle than in an optimistic cycle. Using the U.S. quarterly data from July 01, 1997 to June 29, 2001, three market cycles were identified: optimistic, neutral and pessimistic. The test results indicated that the association between discretionary accruals and abnormal stock returns were insignificant in the neutral market cycle, significant and positive in the optimistic cycle and significant and negative in the pessimistic cycle. These findings indicate that investors tend to ignore the income-increasing effect of discretionary accruals on EPS changes in an optimistic market. The finding suggests that a more delegate and technical analysis of EPS changes is required when earnings information is used for stock pricing. It also suggests that a consideration of market cycle effect on investors&rsquo; use of EPS could improve the earnings-based ratio analysis. The findings propose that researchers interested in investigating the association between stock prices and earnings management should control for the effect of the market cycle during which their samples are drawn. </span></span></p>

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