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Declaration Effect of Cash & Stock Dividends on Share Price: An Empirical Study on Dhaka Stock Exchange

Author

Listed:
  • Rahman, Md Lutfor

    (Northern University Bangladesh)

  • Amin, Mohammad Ruhul

    (Northern University Bangladesh)

  • Siddikee, Md. Noman

    (IIUC)

Abstract

This study analyzes the impact of different types of dividend declaration, namely stock and cash dividends. Using event study method, MAAR and CAAR, this study found no evidence of abnormal returns on the declaration day for either of the types of dividends. However, significant negative returns are reported on days prior to the declaration day for stock dividend, indicating speculative nature of the investors. Furthermore, it provides positive returns during the post-announcement period as the investors realize the chance of potential gains. However, as far as cash dividend is concerned companies listed under DSE do not provide any significant abnormal returns during the 60 days event window. For CAAR, no significant return is reported for cash dividend, while stock dividend provided a maximum 5.6% abnormal returns during the post announcement period.

Suggested Citation

  • Rahman, Md Lutfor & Amin, Mohammad Ruhul & Siddikee, Md. Noman, 2012. "Declaration Effect of Cash & Stock Dividends on Share Price: An Empirical Study on Dhaka Stock Exchange," Asian Business Review, Asian Business Consortium, vol. 1(1), pages 72-79.
    • Handle: RePEc:ris:asbure:0166
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    Cited by:

    1. Mohit Gupta & Navdeep Aggarwal, 2018. "Signaling Effect of Shifts in Dividend Policy: Evidence from Indian Capital Markets," Business Perspectives and Research, , vol. 6(2), pages 142-153, July.
    2. Shekar Bose & Hafizur Rahman, 2022. "Are News Effects Necessarily Asymmetric? Evidence from Bangladesh Stock Market," SAGE Open, , vol. 12(4), pages 21582440221, October.

    More about this item

    Keywords

    Cash Dividends; Stock Dividends; Share Price; Dhaka Stock Exchange;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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