Share price behaviour around dividend announcements in Pakistan

Abstract

This paper investigates the information content (signalling) of dividend announcements by firms listed on the Karachi Stock Exchange (KSE) over the period 2005 to 2009. This sample period was selected in order to avoid contamination of the dividend signal with a capital gains tax effect Lasfer, 1995;Bell and Jenkinson, 2002) Moreover, there is some evidence of information leakage as significant unexpected returns were uncovered two days before the dividend announcements.

Impacts of corporate announcements on stock returns during the global pandemic: evidence from the Indian stock market

“…It is evident that the ex-bonus led to a positive reaction; although being a predetermined event, the market reaction could not sustain longer. These results are partly in line with (Al-Shattarat et al, 2018;Anwar et al, 2016;Khan et al, 2016).…”

“…On the other side, the literature on corporate announcements provides evidence of signaling theory as proposed by Ross (1977) and Walter (1963). Further, Al-Shattarat et al (2018), Anwar et al (2016), Khan et al (2016) provide evidence supporting the signaling theory in emerging markets. Considering these facts, one obvious question is whether this signaling theory applies to the pandemic-affected economic situation.…”

“…(2018), Anwar et al. (2016), Khan et al. (2016) support signaling theory in other emerging markets, the extant literature related to corporate announcements in India do not provide similar views (Alex, 2017; Kumari and Pushpender, 2019; Rohit et al.…”

“…Among the most affected nations, India stood at the second place after the United States in terms of infections and death toll. Further, while Al-Shattarat et al (2018), Anwar et al (2016), Khan et al (2016) support signaling theory in other emerging markets, the extant literature related to corporate announcements in India do not provide similar views (Alex, 2017;Kumari and Pushpender, 2019;Rohit et al, 2016). Although a set of developing and emerging markets could have been a decent sample for the study, we consider India so that the preliminary Corporate announcements and stock returns findings are reported early and become a basis of future extensions to the same by including more nations in the sample set.…”

How Does Stock Market React to Dividend Announcement? An Empirical Evidence from Tanzania Listed Firms

“…Ngoc et al (2016), investigated reaction of the stock price on both the dividend announcement date and the exdividend date, and found a positive effect of dividend announcement on the stock return around the announcement date, and that the stock price moved up as long as the ex-dividend date approaches and then starts decreasing from this date onwards. Khan et al (2016), investigated the information content of dividend announcements by firms listed on the Karachi Stock Exchange (KSE), and report that no significant unexpected returns can be earned on the announcement date by trading on dividend news in Pakistan. Budagaga (2020) examined the impact of cash dividends on the market value of banks listed in Middle East and North African (MENA) emerging countries, and the results revealed that current dividend payouts and dividend yield do not provide information relevant to the establishment of market values in MENA emerging markets; thus, they have no material impact on MENA banks' market values.…”