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Does Dividend Announcement Generate Market Signal? Evidence from Pakistan

Author

Listed:
  • Ghulam Mujtaba Chaudhary

    (Department of Business Administration, University of Management Sciences and Information Technology, Kotli, Azad Kashmir, Pakisthan)

  • Shujahat Haider Hashmi

    (Muhammad Ali Jinnah University, Islamabad, Pakistan,)

  • Aqeel Younis

    (Muhammad Ali Jinnah University, Islamabad, Pakistan.)

Abstract

This study is aimed at investigating the signaling effect of cash dividend announcements by employing the standard event methodology over the companies listed on Karachi Stock Exchange. The companies are randomly selected from different sectors that have announced cash dividends during calendar year 2010 and total 30 companies are included in the study. The standard event methodology is applied to explore the impact of cash dividend announcements upon stock returns and an event window of 15 days with dividend announcement date as the event day is constructed. The results show that the average abnormal returns (AARs), by and large, remained positive and statistically significant in post-event window days. The results of study tend to support dividend signaling hypothesis indicating that the dividend announcement may be used as a tool to generate positive signals in the market

Suggested Citation

  • Ghulam Mujtaba Chaudhary & Shujahat Haider Hashmi & Aqeel Younis, 2016. "Does Dividend Announcement Generate Market Signal? Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 65-72.
    • Handle: RePEc:eco:journ1:2016-01-09
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    References listed on IDEAS

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    Cited by:

    1. Tanveer, Zubair, 2021. "Event Analysis of the COVID-19: Evidence from the Stock Markets of Twenty Highly Infected Countries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 55(1), pages 3-25.
    2. Muljanto Siladjaja & Yuli Anwar & Ismulyana Djan, 2022. "The Relationship between Dividend Policy and Earnings Quality: The Role of Accounting Information in Indonesia’s Capital Market," Economies, MDPI, vol. 10(6), pages 1-23, June.
    3. Zubair Tanveer, 2021. "Speed of Adjustment of Stock Returns Around Dividend Announcements in Pakistan," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 2(4), pages 1-5.

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    More about this item

    Keywords

    Dividend Announcements; Event Window; Abnormal Returns and t-Test;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G2 - Financial Economics - - Financial Institutions and Services

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