Impact of Corporate (Dividend) Action on Stocks in India

Paper presented in 2nd National Conference on "New Challenges and Opportunities for Business and Technology in The Wake of Recent Developments in India, October 17" Conducted by Brindavan College, Bangalore, India.

7 Pages Posted: 2 Aug 2019 Last revised: 21 Oct 2019

See all articles by Nagendra Marisetty

Nagendra Marisetty

Siva Sivani Institute of Management (SSIM); Sri Venkateswara University (SVU) - School of Business Management, Students

Prof. M Suresh Babu

Sri Venkateswara University (SVU) - Department of Management Studies

Date Written: October 14, 2017

Abstract

The investment decision is influenced by many factors of which one such factor is return. The shareholders may get return in the form dividend which affects the share prices. The behavior of stock prices is unpredictable as price movement for different activities will move in different ways. The stock price movements can be divided into Economic and corporate activities. The impact of economic activities will be more or less same on all the stock prices while impact of corporate action varies from one stock to the other. Dividend payment is one of the important corporate actions that will have an impact on the behavior of stock prices. This research highlights the impact of dividend payment on the behavior of stock prices. To understand this behavior, ten stocks have been randomly picked which has paid the dividend in 2016. The researchers have used popular event window study and cumulative returns. In this regard, the researchers have picked two dates, namely dividend announcement date and the other is dividend effective date. The paired sample t-test is employed to compare cumulative returns before and after dividend announcement.

Keywords: Stock price behavior, Corporate actions, Economic Activities, Dividend payment, Event window, Cumulative returns, Announcement date and Effective date

JEL Classification: G1, G3

Suggested Citation

Marisetty, Nagendra and M, Suresh Babu, Impact of Corporate (Dividend) Action on Stocks in India (October 14, 2017). Paper presented in 2nd National Conference on "New Challenges and Opportunities for Business and Technology in The Wake of Recent Developments in India, October 17" Conducted by Brindavan College, Bangalore, India., Available at SSRN: https://ssrn.com/abstract=3423334

Nagendra Marisetty (Contact Author)

Siva Sivani Institute of Management (SSIM) ( email )

Kompally
Secunderabad
Hyderabad
India

Sri Venkateswara University (SVU) - School of Business Management, Students ( email )

Tirupathi
India

Suresh Babu M

Sri Venkateswara University (SVU) - Department of Management Studies ( email )

S.V. University
Tirupati
India

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