Dividend Announcement and Market Response in Indian Stock Market: An Event-Study Analysis

Maitra, Debasish; Dey, Kushankur

doi:10.1177/097215091201300206

Cited by 30 publications

(24 citation statements)

References 19 publications

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“…Renata et al (2017) based on market model of event study found the positive statistically insignificant AAR exist within the event. Maitra and Dey (2012) incorporated the CAPM model and market model separately to measure the market response of dividend announcement in Indian stock market. Bhattacharjee and De (2018) observed that the market reaction to firm-specific corporate news varies according to the type of new across different industry groups.…”

Section: Review and Literaturementioning

confidence: 99%

Reaction of Stock Price to Frauds’ Announcements: Evidence from Indian Banking Sector

Sharma

Verma

2020

Asia-Pacific Journal of Management Research and Innovation

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This paper is an attempt to investigate the reaction of stock price of Indian banks with respect to announcements of frauds. The Event Study Methodology is used to examine the impact of frauds’ announcements to stock price of banks which experienced fraud. The fraud cases which exceed ₹1,000 crores are considered for the period from January 2014 to December 2018. The results indicate that the fraud announcements do affect the stock price of banks which experienced fraud. In majority of cases of frauds under consideration, the study found significant abnormal loss which further supported by the results of abnormal volume ratio. The highest abnormal loss is found in the stock price of Punjab National Bank (8.74 per cent) which involves the scam committed by the Nirav Modi. Due to increased frauds in the banking sector, the confidence of the investors adversely affects which may further lead to consequences on concerned banks. In this direction, the results of the study have importance for the policy makers and regulators for analysing the behaviour of stock price with respect to the announcements of frauds in the Indian banking sector.

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Section: Review and Literaturementioning

confidence: 99%

Reaction of Stock Price to Frauds’ Announcements: Evidence from Indian Banking Sector

Sharma

Verma

2020

Asia-Pacific Journal of Management Research and Innovation

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“…Thus, Indian firms can distribute their profits in the form of dividends and raise funds from capital markets at lower costs to meet their positive NPV projects requirements. It has been found that the firm’s dividend policy has greater implications for the firm’s performance such as profitability and stock market returns (Amidu, 2007; Maitra & Dey, 2012; Saravanakumar, 2011; Uwuigbe, Jafaru, & Ajayi, 2012).…”

Section: Rationale Of the Studiesmentioning

confidence: 99%

Dividend Smoothing and Business Groups: Evidence from Indian Companies

Labhane

Mahakud

2018

Global Business Review

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This article examines the determinants of dividend smoothing behaviour of business group-affiliated firms relative to unaffiliated firms in India during the period from 1994–1995 to 2012–2013. The study is based on 240 sample firms listed on the National Stock Exchange (NSE) that has continuous dividend data for the entire period. The business group-affiliated firms tend to smooth their dividend payments more than that of standalone firms and the actual payout ratio as well as the target payout ratio of business group-affiliated firms is higher than that of standalone firms. For the determinants of dividend smoothing, the investment opportunities and the financial leverage are the significant factors influencing the dividend smoothing behaviour of business group-affiliated firms and standalone firms, respectively. For the entire sample, the firms with high investment opportunities, low leverage, high business risk and that are smaller in size tend to smooth their dividend payments more. As for the macroeconomic factors, the high dividend distribution tax (DDT) imposed by government tends the firms to smooth their dividend payments more. Overall, the results support the information asymmetry and agency-based explanation of dividend smoothing behaviour.

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“…The study reports that dividend announcement conveys information to market traders. Using both capital asset pricing model (CAPM) and market model, Maitra and Dey (2012) observe that there are significant abnormal returns (positive or negative or both) upon dividend announcement which is more evident under the CAPM model. Campbell and Ohuocha (2011) examine whether stock dividend announcements create value for firms traded in the Nigerian Stock Exchange by using the standard event study methodology.…”

Section: Review Of Literaturementioning

confidence: 99%

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

Chatterjee

Dutta

2017

Global Business Review

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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.

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Dividend Announcement and Market Response in Indian Stock Market: An Event-Study Analysis

Cited by 30 publications

References 19 publications

Reaction of Stock Price to Frauds’ Announcements: Evidence from Indian Banking Sector

Reaction of Stock Price to Frauds’ Announcements: Evidence from Indian Banking Sector

Dividend Smoothing and Business Groups: Evidence from Indian Companies

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

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