Price Reaction to Dividend Initiations and Omissions in Emerging Market: Evidence from Pre and Post Market Crisis in Bangladesh

The International Journal of Business and Finance Research, Vol. 1, No. 2, pp.51-68, 2007

18 Pages Posted: 18 Feb 2010

See all articles by Sabur Mollah

Sabur Mollah

Sheffield University Management School, University of Sheffield; Swansea Management School, Swansea University; Hull University Business School; Hull University Business School

Date Written: 2007

Abstract

Dividend signalling and information content of dividends are areas of interest in financial literature. A vast majority of the research conducted on information content of dividend. However, no study has examined the effectiveness of dividend announcements as a signalling device in the stock market of Bangladesh. This study employs conventional event study methodology to investigate whether dividend announcements convey information to the market or whether investors dividend announcements as the signalling device of the firm’s prospects. The analysis is completed for the time period before and after the1998 market crisis in Bangladesh. The sample consists of cash dividend announcements for Dhaka Stock Exchange (DSE) listed firms preceding and following the market crisis. The empirical results suggest that the reactions to dividend announcements are not significant either preceding or following the financial crisis in Bangladesh, therefore, announcements of dividends neither convey information to the market nor do investors consider dividend announcements as a signal.

Suggested Citation

Mollah, Sabur, Price Reaction to Dividend Initiations and Omissions in Emerging Market: Evidence from Pre and Post Market Crisis in Bangladesh (2007). The International Journal of Business and Finance Research, Vol. 1, No. 2, pp.51-68, 2007. Available at SSRN: https://ssrn.com/abstract=1543431

Sabur Mollah (Contact Author)

Sheffield University Management School, University of Sheffield ( email )

Conduit Road
Sheffield, Sheffield S10 1FL
United Kingdom

Swansea Management School, Swansea University ( email )

Singleton Park
Swansea, Wales SA2 8PP
United Kingdom

Hull University Business School ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Hull University Business School ( email )

Cottingham Road
Hull, Hull HU6 7RX
United Kingdom

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