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Price Reactions to Dividend Announcements on the Nigerian Stock Market

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  • Olatundun Janet Adelegan

    (University of Ibadan Ibadan, Nigeria)

Abstract

The study uses a modified market model to investigate whether the Nigerian stock market reacts efficiently to dividend announcements in terms of price adjustments. The study finds that the cumulative excess returns (CERs) for dividend paying firms are positive and significant for 30 days from the day of the announcement, while the CERs for dividend omitting firms for the same period are significant and negative. The CERs for the subsamples are statistically significant around the event window. Overall, this provides evidence that the Nigerian stock market is not semi–strong efficient, that dividend policy matters and that share prices do react to dividend announcements.

Suggested Citation

  • Olatundun Janet Adelegan, 2009. "Price Reactions to Dividend Announcements on the Nigerian Stock Market," Working Papers 188, African Economic Research Consortium, Research Department.
    • Handle: RePEc:aer:wpaper:188
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    File URL: ftp://41.215.20.26/RePEc/aer/wpaper/RP188.pdf
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    Cited by:

    1. Pyemo N. Afego, 2013. "Stock Price Response to Earnings Announcements: Evidence From the Nigerian Stock Market," Journal of African Business, Taylor & Francis Journals, vol. 14(3), pages 141-149, December.
    2. Nageri Kamaldeen Ibraheem & Abdulkadir Rihanat Idowu, 2019. "Is the Nigerian Stock Market Efficient? Pre and Post 2007-2009 Meltdown Analysis," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(3), pages 38-63, September.
    3. Prince Kwasi Sarpong & Mabutho Sibanda & Merle Holden, 2016. "Investigating Chaos on the Johannesburg Stock Exchange," Journal of Economics and Behavioral Studies, AMH International, vol. 8(5), pages 56-67.

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