Stock Prices Reaction to Dividend Announcements: A Study on Listed Companies in the Damascus Securities Exchange

International Journal of Academic Research in Accounting, Finance and Management Sciences, Volume 5, Issue 1, 2015

10 Pages Posted: 1 Apr 2015

See all articles by Ghada Abbas

Ghada Abbas

Higher Institute of Business Administration (HIBA)

Date Written: December 8, 2014

Abstract

According to the signaling theory, dividend announcements are usually considered as a signal to the investors, about firm's future performance, that results in stock prices changes. This study attempts to investigate the stock prices response to dividend announcement in the Damascus Securities Exchange. The purpose of the study is to identify whether there are any significant abnormal returns around the public announcement of dividend. An event study methodology is used for an event window of forty days surrounding the announcement day. Research results indicate that most average abnormal returns are statistically insignificant, whereas the cumulative average abnormal returns are statistically significant for the whole event window. The downward drift of the cumulative average abnormal returns six days after the announcement suggests that prices don't adjust immediately to dividend information. The stock reactions appear within post-event window gradually in response to the dividends announcement.

Keywords: Dividend Announcement, Abnormal Return, Price Reaction, Event Study, Damascus Securities Exchange

JEL Classification: G12, G14

Suggested Citation

Abbas, Ghada, Stock Prices Reaction to Dividend Announcements: A Study on Listed Companies in the Damascus Securities Exchange (December 8, 2014). International Journal of Academic Research in Accounting, Finance and Management Sciences, Volume 5, Issue 1, 2015, Available at SSRN: https://ssrn.com/abstract=2587551

Ghada Abbas (Contact Author)

Higher Institute of Business Administration (HIBA) ( email )

Department of Banking and Financial Management
Damascus, 12890
Syria

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