Signalling effect: Evidence from dividend announcements in bombay stock exchange Prabakaran1, Krishnaveni2, Mohanraj3 1Assistant Professor, Department of Management Studies, SNS College of Technology, Coimbatore, Tamilnadu. Email: prabakaranv.mba@gmail.com 2Associate Professor, Department of Management Studies, SNS College of Technology, Coimbatore, Tamilnadu. Email: krishnimba@gmail.com 3Assistant Professor, Department of Management Studies, SNS College of Technology, Coimbatore, Tamilnadu. Email: mohanrajemba86@gmail.com Online published on 23 January, 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 Bombay Stock Exchange from April 01, 2009 to March 31, 2016. A total of 1163 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. Top Keywords Abnormal Return, Bombay Stock Exchange, Corporate Announcements, Dividend Announcements, Event Study, Signaling Effect, Significant Impact. Top |