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.

Executive Summary This article examines the impact of open market share repurchase announcements on stock returns in the Bombay Stock Exchange (BSE). The main objective is to examine whether share repurchase announcements under the open market route have any significant impact on the returns of the stocks traded in the BSE. The article covers the period from 2009 to 2013. For sample selection, two criteria were used: first, the firm should have been listed in the BSE for at least 28 trading days before the repurchase announcement date, and second, the firm should have all relevant data required by this study. A total of 95 repurchase announcements fulfilled these criteria. The analysis period extended from –28 to +28 trading days relative to the repurchase announcement date ( t = 0). The findings of the study will help us to understand how the market responds to share repurchase announcements in India and whether a firm actually benefits by repurchasing its own shares from the market. This study uses a standard event methodology based on an ordinary least squares market model with the aim of finding out whether repurchase announcements generate any abnormal return around the repurchase announcement date. While applying the market model for estimating the abnormal returns, the regression is estimated based on the stock return of the firm and market return of the previous 120 trading days. So, here the estimation window takes into account 120 observations. Using this, the expected returns are generated and then the abnormal returns are derived for the event window, 28 days prior to the event date and 28 days after the event date. The findings of the study indicate that share repurchase announcements do not necessarily generate abnormal stock returns in the Indian equity market unlike developed economies like the US, Canada, and Australia. The whole sample is further divided into various subsamples on the basis of firm size and size of repurchase. The subsample analyses reveal that smaller firms do not necessarily experience higher abnormal stock returns following repurchase announcements than that of the larger firms. The findings weakly support the view that larger repurchase size generates greater abnormal stock returns than the smaller ones.

The article uses panel data regression on a sample of 26 public sector and 20 private sector banks operating in India over the period 2004–2005 to 2012–2013 in order to empirically examine the relationship between profits and asset–liability (A–L) composition of Indian banks. The sample was initially split into public sector and private sector banks. Earning before tax (EBT) of public sector banks appear to be generated by all the assets under the asset portfolio while, in private sector banks, the EBT seems to be produced by loans and advances and deposits and placings to banks. From liabilities’ perspective, the ‘short-term funding’ appears to be the cheapest for both the bank groups. The sample was then split into high-profit and low-profit banks. The results show that, compared to the high-profit banks, low-profit banks experience higher rate of return on loans and advances, investments and fixed assets. The study does not find that high-profit banks always enjoy relatively cheaper cost of funding than low-profit banks.

This article examines how stock prices behave following cash dividend announcements in the Indian equity market considering 3,671 cash dividend announcements during the period 2012–2019, using both aggregate-level and firm-level analysis. Further, the study investigates the factors that lead to the generation of abnormal gain or loss following dividend announcements. We found that cash dividend announcements generate abnormal stock returns in the Indian equity market immediately after the dividend announcement. However, this impact persists for a very short spell, and after that, the stock prices normalize gradually. Results also show that firms with a higher promoter shareholding gain less on dividend announcements. The empirical evidence of this study thinly supports the information signalling theory and dividend clientele theory in the Indian market.