A STUDY ON DIVIDEND ANNOUNCEMENT IMPACT ON MARKET CAPITALIZATION ACROSS VARIOUS SECTORS OF NSE.

Mr. Dinesh Tandon; Dr. Nidhi Walia

Volume : VII, Issue : VII, July - 2017

A STUDY ON DIVIDEND ANNOUNCEMENT IMPACT ON MARKET CAPITALIZATION ACROSS VARIOUS SECTORS OF NSE.

Mr. Dinesh Tandon, Dr. Nidhi Walia

Abstract :

Purpose: The purpose of this research paper is to analyse the effect of dividend announcements on market capitalization of companies.

Design/Methodology: Based on sample of 25 companies belonging to different sectors mean closing prices, 20 days pre and 20 days post dividend announcements were compared using event window study. The significance of difference between them was also measured using paired/dependent t–test.

Findings: The results of research showed than pre announcement mean closing prices were different from post mean closing prices thus impacting the firm’s market capitalization to a large extent.

Practical implications: The dividend announcements and its impact on value of firm has always been a puzzle. The results will help in better understanding the impact of dividend announcements on market capitalization of companies in a more simple and concrete manner. The findings of the study have implications for directors, mangers, investors and other participants in stock markets.

Originality/Value: The area of dividend announcement effects has been extensively and intensively researched. One of its kinds, this study will be helpful in aidging the literature gap in exploration of dividend announcement effect in elaborative and sectoral form.