Dividend Signalling And Market Efficiency In Emerging Economy: A Study of Indian Stock Market

Sharma, Jitendra Kumar; Pandey, V. S.

doi:10.7575/aiac.ijfas.v.2n.2p.8

Cited by 8 publications

(3 citation statements)

References 35 publications

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“…In conclusion, it can be noted that dividend policy for the banking industry provides signal to the investors and can reduce stock price volatility. This result is quite similar to other studies as demonstrated by Baskin (1989); Hussainey et al (2011); Dewasiri and Banda (2014); Lotto (2021); Provaty and Siddique (2021) etc; but in contrast to result obtained by Allen and Rachim (1996); Sharma and Pandey (2014); Masum (2014). However, it is also noted that dividend policy is not solely responsible for stock price volatility.…”

Section: Jujbrsupporting

confidence: 92%

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Examining Volatility in Bank Stock Prices: A Comparative Exploration of Dividend Policies, Macroeconomic Influences, and Company-Specific Factors

Rahman,

Md. Yousuf Harun

2024

JUJBR

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This study aims to ascertain and compare factors influencing stock price volatility in terms of dividend policy, macroeconomic and company specific aspects for selected subset of listed banks in Bangladesh. Eleven years of secondary data (from 2011 to 2021) for fifteen commercial banks (representing 61.5% market capitalization of the banking sector) was acquired from diverse sources. The dependent variable chosen is stock price volatility, whereas the dividend policy is initially represented by dividend payout ratio (PRt & PRt-1), dividend yield (DYt & DYt-1). Several firm and country-specific macroeconomic indicators are used as control variables. A methodical approach followed by panel data analysis has been employed to identify a suitable model that can yield more accurate estimators. Consequently, some diagnostic tests are also performed to account for diagnosed problems: contemporaneous cross-sectional correlation, group-wise heteroskedasticity and autocorrelation; Driscoll-Kraay standard error regression model is finally applied. The study not only found significant negative impact of dividend payout ratio but also spotted a significant influence of inflation, EPS, and firm size on stock price volatility. Price volatility influenced by “No dividend policy” can be reinvestigated from the aspect of behavioral finance in the future. Furthermore, this study also sheds light on to what extent firm-specific and macroeconomic influence impact stock price volatility in Bangladesh's banking sector.

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Section: Jujbrsupporting

confidence: 92%

“…Another study conducted by Sharma and Pandey (2014); on Indian Stock market examined dividend signaling and market efficiency in emerging economies. Their study revealed that the signaling effect doesn't work for changes in stock price associated with dividend increase/decreases along with financial results announcements.…”

Section: Jujbrmentioning

confidence: 99%

Examining Volatility in Bank Stock Prices: A Comparative Exploration of Dividend Policies, Macroeconomic Influences, and Company-Specific Factors

Rahman,

Md. Yousuf Harun

2024

JUJBR

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“…Despite the extensive literature on market reaction in emerging economies, to the best of my knowledge, this is the first study to focus on debt renegotiation. More specifically, some studies investigated market reaction in emerging economies to corporate social responsibility (CSR) (Arya & Zhang, 2009), dividend change announcements (Sharma & Pandey, 2014), terrorist attacks (Mnasri & Nechi, 2016) and Covid-19 (Topcu & Gulal, 2020). However, no research analyzes the market reaction to the debt renegotiation announcement focused on the emerging economy.…”

Section: Introductionmentioning

confidence: 99%

Essays on debt renegotiation: determinants, market reaction and earnings management

Eça¹

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É preciso reconhecer que o desenvolvimento deste trabalho só foi possível com o auxílio de muitas pessoas. Por esta razão, reservo este espaço para humildemente agradecer a cada um que, de forma direta ou indireta, contribuiu para a elaboração desta tese.Em primeiro lugar, agradeço a Deus por ter me capacitado e me dado força necessária para superar os desafios que se fizeram presentes ao longo desta caminhada. Também agradeço às preciosas intercessões de Nossa Virgem Santíssima.Agradeço aos meus pais, que tanto se esforçaram para que eu tivesse uma boa educação. Estendo os agradecimentos ao meu irmão por todo apoio e torcida.Agradeço à minha esposa Marina por todo o suporte. Por pacientemente compreender as ausências que se fizeram necessárias. Por me apoiar incondicionalmente. E por me fazer perceber que nenhuma dificuldade é grande o bastante quando se está ao seu lado.Agradeço à minha orientadora Profa. Dra. Tatiana Albanez, por quem tenho uma enorme admiração e gratidão. É incrível como é agradável trabalhar com você. Sua organização, comprometimento, cordialidade, inteligência, bom humor, tudo isso fez com que o processo de elaboração da tese, que é algo exaustivo por natureza, fosse leve e estimulante. Agradeço ao Prof. Dr. Maurício Ribeiro do Valle pelos ensinamentos e conselhos que, certamente, me auxiliaram e auxiliam até hoje na minha trajetória profissional. O senhor me inspira a ser um profissional melhor.

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Dividend reduction and stock price reaction in Indian market: is there a role of share repurchase?

Chatterjee

Tiwari²

2022

JIBR

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Purpose This paper aims to analyze the stock price reaction because of dividend reduction (DR) announcements in the Indian equity market, controlling for share repurchases. Design/methodology/approach The sample comprises National Stock Exchange (NSE) 500 companies listed in the NSE Ltd. covering a time span from year 2009 to 2019. Using the event study methodology, the authors measure the impact of DR announcements on security prices around the event day. The authors also examine the price response to DRs at the interim stage versus the final stage and identify the factors that drive the decision to reduce dividends at the interim level versus final level. Findings The authors find that overall DR announcements negatively impact abnormal returns. Firms that experience stronger adverse price reaction following DR announcements resort to share repurchase in the same year to boost stock prices. The authors find that interim DRs create more negative price reactions than final DRs. Finally, firms experiencing lower levels of prior year earnings, firms with smaller sizes and overvalued firms tend to reduce dividends at the interim level instead of postponing the reduction to the final level. Originality/value This paper examines stock price reaction because of DR announcements of Indian firms. The sample comprises firms that reduce dividends with contemporaneous share repurchases as well as firms that reduce dividends without contemporaneous repurchase activity. To the best of the authors’ knowledge, studies on substitution effect of dividends with buyback in the context of Indian equity market are rare. Further, investigating the difference in stock price movement because of DRs at the interim level versus the final level is the unique contribution of this paper.

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Dividend Signalling And Market Efficiency In Emerging Economy: A Study of Indian Stock Market

Cited by 8 publications

References 35 publications

Examining Volatility in Bank Stock Prices: A Comparative Exploration of Dividend Policies, Macroeconomic Influences, and Company-Specific Factors

Examining Volatility in Bank Stock Prices: A Comparative Exploration of Dividend Policies, Macroeconomic Influences, and Company-Specific Factors

Essays on debt renegotiation: determinants, market reaction and earnings management

Dividend reduction and stock price reaction in Indian market: is there a role of share repurchase?

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