International Journal of Management, IT and Engineering
Year : 2019, Volume : 9, Issue : 1
First page : ( 80) Last page : ( 103)
Online ISSN : 2249-0558.

Signalling effect: Evidence from dividend announcements in National Stock Exchange

Prabakaran, Krishnaveni, Shamini

Assistant Professor, Department of Management Studies, SNS College of Technology, Coimbatore-641 035, Tamil Nadu, India

Online published on 24 October, 2019.

Abstract

The objective of this study is to understand the market reaction to dividend announcements on equity price and volume traded of companies listed in different sectoral indices of National Stock Exchange from April 01, 2009 to March 31, 2016. A total of 998 dividend announcements by companies listed in selected indices during the financial year 2009 to 2015 were considered for this study. Event Study has been adapted in this research work to test the significant impact of dividend announcement on equity price and volume. The study has adapted 30 days as event window includes 15 trading days prior to announcements and 15 days trading from the day of announcements. Estimation period of 100 days was considered to find out the existence of abnormal return during the event window. Paired sample ‘t’ test was used to test the significant impact of dividend announcements on share price and volume traded. The study found that the announcements of dividend did not influence the equity price significantly, whereas, volume traded was influenced significantly for few companies. The current market price of a share already digested all the information and hence, no more excess return could be generated pertaining to announcements of dividend.

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Keywords

Abnormal Return, Dividend Announcements, Event Study, National Stock Exchange, Signaling Impact.

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