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Dividend Announcement and Ex-Dividend Effects on Stock Return

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  • Dinh Ngoc
  • Nguyen Chi Cuong

Abstract

We study the impact of dividend policy on the stock return by investigating reaction of the stock price on the dividend announcement date and the ex-dividend date. In order to achieve this goal, a sample comprising 1962 observations of dividend-related events from 432 listed companies in Vietnam during the period 2008 to 2015 is chosen to analyze and the event study methodology is used to estimate abnormal returns to the shares around the announcement date and the ex-dividend date. Our results clearly show that the effect of dividend announcement on the stock return is positive around the announcement date. In addition, the stock price moves up as long as the ex-dividend date approaches and then starts decreasing from this date onwards.

Suggested Citation

  • Dinh Ngoc & Nguyen Chi Cuong, 2016. "Dividend Announcement and Ex-Dividend Effects on Stock Return," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(7), pages 207-207, July.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:7:p:207
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    References listed on IDEAS

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    1. Dong, Ming & Robinson, Chris & Veld, Chris, 2005. "Why individual investors want dividends," Journal of Corporate Finance, Elsevier, vol. 12(1), pages 121-158, December.
    2. Dimitrios I. Maditinos & Zeljko Sevic & Nikolaos G. Theriou & Alexandra V. Tsinani, 2007. "Individual investors' perceptions towards dividends: the case of Greece," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 1(1), pages 18-31.
    3. M. J. Gordon, 1963. "Optimal Investment And Financing Policy," Journal of Finance, American Finance Association, vol. 18(2), pages 264-272, May.
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    Cited by:

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    2. Adler Haymans Manurung & Nera Marinda Machdar & John Edward Harly Jacob FoEh & Jhonni Sinaga, 2024. "Dividend Policy as a Moderating of the Effect of Dividend Announcement on Stock Price in Indonesian Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 96-105, July.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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