This document summarizes a study that analyzes the impact of dividend announcements on stock prices of private commercial banks listed on the Dhaka Stock Exchange (DSE) in Bangladesh. The study examines stock price movements of 25 banks surrounding 44 days of dividend announcement dates. Based on prior literature and theories, the study hypothesizes that dividend announcements either do or do not contain price sensitive information that would impact stock prices. Using an event study methodology, the study analyzes daily stock price movements relative to dividend announcement dates to test this hypothesis. Preliminary results found stock price declines for some banks, rises for others, and no changes for some, with no statistically significant overall impact. This suggests that dividend announcements in this market may not contain
Dividend policy is said to be one of the crucial decision
in corporate finance management from past decades as
decision of dividend is linked with the financial
management objective of wealth maximization and profit
maximization it is always crucial decision. Which should
be given preference wealth maximization or optimum
capital structure? Wealth maximization is said to be
financial management practice which focus on increasing
the net worth of a company or firm so that return for
shareholders can be maximize. No universal consent has
yet come out after several decades of study. There are
theories and studies which have contributed to decide
amount of dividend. Some theories says that there is
relation between dividend decision and value of
firm(relevance theory) and some says there is no such
association(irrelevance theory).There are conflicting
viewpoint as far as the impact of dividend decision on the
value of the firm is considered. The objectives of this
research are firstly, to define the concept and scope of
dividend policy and secondly, to study the irrelevance
theory/ (Modigliani-Miller Model) of dividend policy and
relation between dividend policy approach and market
share prices. Secondary data has been taken for
research. The CNX Dividend Opportunities Index is
considered as Universe. The study is sourced by critical
and creative analysis (literature review) of research
papers and Case Study Method. There are not significant
fluctuations in share prices after declaration of dividend.
Sometimes these fluctuations are associated but not
positive always and there are other factors which
influence share prices. It will facilitate the organizations
to identify with the behavioral aspect of shareholders
which they can use to add value which move towards the
way to wealth maximization as well as profit
maximization.
This paper scrutinizes Determinants of Capital Structure: A study on some selected corporate firms in Bangladesh. We have taken 10 out of 37 listed companies of DSE dividing into two sectors i.e. Pharmaceuticals and chemicals and Tannery sector, five years data from 2013 to 2017 has been collected from respective annual reports. Total number of observations was 50. There are different factors that affect a firm's capital structure decision. We use leverage (D/E ratio) as dependent variable and independent variables are profitability, tangibility, tax, size, growth, non-debt tax shield (NDTS) and financial costs. By using Descriptive Statistical Analysis, Correlation Analysis and Regression Analysis tools we find that Tangibility, size, NDTS, and financial costs are positively related with leverage and Profitability, tax, and growth are negatively related with leverage. In our analysis we see profitability, tangibility of asset, growth and non-debt tax shield have significant association. So when we take capital structure decision of the above firms we should consider profitability, tangibility of asset, growth and non-debt tax shield because other independent variables are insignificant in the context of Bangladesh economy.
The Influence Of Manager Abilities On Sharia Mutual Fund Performance(Study I...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Dividend policy is said to be one of the crucial decision
in corporate finance management from past decades as
decision of dividend is linked with the financial
management objective of wealth maximization and profit
maximization it is always crucial decision. Which should
be given preference wealth maximization or optimum
capital structure? Wealth maximization is said to be
financial management practice which focus on increasing
the net worth of a company or firm so that return for
shareholders can be maximize. No universal consent has
yet come out after several decades of study. There are
theories and studies which have contributed to decide
amount of dividend. Some theories says that there is
relation between dividend decision and value of
firm(relevance theory) and some says there is no such
association(irrelevance theory).There are conflicting
viewpoint as far as the impact of dividend decision on the
value of the firm is considered. The objectives of this
research are firstly, to define the concept and scope of
dividend policy and secondly, to study the irrelevance
theory/ (Modigliani-Miller Model) of dividend policy and
relation between dividend policy approach and market
share prices. Secondary data has been taken for
research. The CNX Dividend Opportunities Index is
considered as Universe. The study is sourced by critical
and creative analysis (literature review) of research
papers and Case Study Method. There are not significant
fluctuations in share prices after declaration of dividend.
Sometimes these fluctuations are associated but not
positive always and there are other factors which
influence share prices. It will facilitate the organizations
to identify with the behavioral aspect of shareholders
which they can use to add value which move towards the
way to wealth maximization as well as profit
maximization.
This paper scrutinizes Determinants of Capital Structure: A study on some selected corporate firms in Bangladesh. We have taken 10 out of 37 listed companies of DSE dividing into two sectors i.e. Pharmaceuticals and chemicals and Tannery sector, five years data from 2013 to 2017 has been collected from respective annual reports. Total number of observations was 50. There are different factors that affect a firm's capital structure decision. We use leverage (D/E ratio) as dependent variable and independent variables are profitability, tangibility, tax, size, growth, non-debt tax shield (NDTS) and financial costs. By using Descriptive Statistical Analysis, Correlation Analysis and Regression Analysis tools we find that Tangibility, size, NDTS, and financial costs are positively related with leverage and Profitability, tax, and growth are negatively related with leverage. In our analysis we see profitability, tangibility of asset, growth and non-debt tax shield have significant association. So when we take capital structure decision of the above firms we should consider profitability, tangibility of asset, growth and non-debt tax shield because other independent variables are insignificant in the context of Bangladesh economy.
The Influence Of Manager Abilities On Sharia Mutual Fund Performance(Study I...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Institutional Investors Heterogeneity And Earnings Management: The R&D Invest...Waqas Tariq
This study examines the association between different institutional investors\' ownership and earnings management practice through R&D expenditures. It investigates this relationship for a sample of 123 US firms. We examine also the effect of institutional ownership on earnings management of firms having different information environment (S&P 500 versus non S&P 500). Results show that while investment funds exacerbate earnings management by encouraging managers to limit R & D expenditures, pension funds and banks follow passive behaviors. Moreover, the hypothesis of the relevance of the environment information in the explanation of the institutional investors’ behavior seems to be important in our case.
Stock Return Predictability with Financial Ratios: Evidence from PSX 100 Inde...Wasim Uddin
The objective of the current study is to investigate the stock return’s predictability by using financial ratios and control variable of PSX 100 Index companies during period from 2001-2014.
Voluntary Disclosure, Ownership Structure, Information Asymmetry and Cost of ...iosrjce
The aim of this study is at examining the influence of voluntary disclosure, information asymmetry
and ownership structure towards the cost of capital method by employing WACC (Weighted Average Cost of
Capital) method. The analysis method used in this research is the pathway analysis. The sample selection using
purposive sampling generates 93 observations (31 companies *3 years) manufacturing company in 2011-
2013. The results show that the extent of disclosures concerning the company's information will build investor
confidence in the investment, so that the expected rate of return is low and as a result the company’s incurred
capital costs is low. The low rate of return is due to the disclosure of required information by the company’s
management which would establish investor confidence in the investment.
CÔNG TY CỔ PHẦN CÔNG NGHỆ TIME TRUE LIFE
57 - 59 Hồ Tùng Mậu, Phường Bến Nghé, Quận 1, HCM
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Financial Analysis on Recession Period at M&M TractorsProjects Kart
Financial ANalysis (also stated as financial plan analysis or accounting analysis) refers to an assessment of the viability, stability and profitable of a business, sub-business or project. Visit www.projectskart.com for more information. It is performed by professionals World Health Organization prepare reports exploitation ratios that create use of data taken from monetary statements and different reports. These reports area unit typically given to prime management mutually of their bases in creating business selections.
Effect of Portfolio Diversification on Commercial Banks Financial Performance...inventionjournals
The study examined the effect of portfolio diversification on Commercial Banks financial performance. Mixed method of research design was used and data was collected using questionnaires and interview schedules. Target population was 43 licensed Commercial Banks in Kenya from which one hundred and thirty three (133) managers were randomly selected to form sample size. Validity of the research instruments was ensured through content, face and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis and bivariate regression analysis. The study established a positive statistically significant relationship between portfolio diversification and financial performance. The portfolio diversification explained 68% of the changes in the financial performance of commercial banks in Kenya and that most banks diversify their investments which has enabled them to increase profits and performance in the past years.The study recommended that financial institutions should invest in a combination of assets which are negatively correlated because this maximizes revenue (returns) and minimizes losses (risks). Further study should be undertaken to establish the best combination of assets that can yield an efficient portfolio.
This study examines the underlying components that determine the dividend policy statement of corporations in Nigeria. The study purposively select ninety-four (94) corporations out of the universe of companies listed in the Nigerian Stock Exchange. Financial ratios were extracted and computed from published annual audited financial reports spanning 2007 to 2017. This was informed by the ex-post facto research design adopted to observe key indicators of these corporations in retrospect. The panel regression analysis was used to explain the numerical phenomenon collated. The Durbin-Wu-Hausman specification test found the fixed effect model to be more suitable. The empirical results indicate that financial leverage has a significant negative impact on dividend payout; liquidity has an insignificant positive impact on dividend payout policy; profitability has an insignificant positive impact on dividend payout decision; and company size has a significant positive impact on dividend payout dicision. The study concluses that liquidity, profitability and company size are the determinants of the dividend policy of corporations in Nigeria. More specifically, company size was found to be a major determinant to the dividend policy statement of corporations in Nigeria. The study suggests that, corporations should sustain their liquid positions, asset base and profit levels at all times to meet the universe of desires of their shareholders.
A Study on Factors Influencing Investment Decision Regarding Various Financia...ijtsrd
In the current era of financial inclusion, digitalization and economy driving towards a faster pace, the investors are very much concerned about their savings which can be transferred into investments. The main purpose of investment is to maximize the returns out of it with minimum expenses and risk. There are various factors which affect the investment decision like demographic factors and behavioural biases which decides the type, tenure, amount of the investment. This paper explores that return, advice, tax benefit, liquidity risk appetite of the investors altogether plays a significant part in influencing the investors. Is there any impact of demographic factors like age, gender and income on factors influencing investment decision tried to find out. The results show that factors influencing the investment decision are influenced by income level not by age and gender. Dr. Ankit Jain | Mr Raj Tandel "A Study on Factors Influencing Investment Decision Regarding Various Financial Products" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-6 , October 2020, URL: https://www.ijtsrd.com/papers/ijtsrd33678.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/33678/a-study-on-factors-influencing-investment-decision-regarding-various-financial-products/dr-ankit-jain
Finance is the lifeblood and lifeline of any business entity either commercial or non-commercial. The
Survival, Stability and Sustainability of a firm is highly associated with its financial wellness. It can be observed through its ability to pay(re) short-term as well as long term liabilities, meeting the regular financial obligations, to increase the value of firm and ability to generate profit. Financial analysis, evaluation, and assessment help in determines the financial position and financial strength of a firm. Among the plenty of methods and tolls available for financial performance, ratio analysis is more useful and meaningful. These ratios make it possible to analyze the evolution of the financial situation of a firm (trend analysis), cross-sectional analysis and comparative analysis.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Institutional Investors Heterogeneity And Earnings Management: The R&D Invest...Waqas Tariq
This study examines the association between different institutional investors\' ownership and earnings management practice through R&D expenditures. It investigates this relationship for a sample of 123 US firms. We examine also the effect of institutional ownership on earnings management of firms having different information environment (S&P 500 versus non S&P 500). Results show that while investment funds exacerbate earnings management by encouraging managers to limit R & D expenditures, pension funds and banks follow passive behaviors. Moreover, the hypothesis of the relevance of the environment information in the explanation of the institutional investors’ behavior seems to be important in our case.
Stock Return Predictability with Financial Ratios: Evidence from PSX 100 Inde...Wasim Uddin
The objective of the current study is to investigate the stock return’s predictability by using financial ratios and control variable of PSX 100 Index companies during period from 2001-2014.
Voluntary Disclosure, Ownership Structure, Information Asymmetry and Cost of ...iosrjce
The aim of this study is at examining the influence of voluntary disclosure, information asymmetry
and ownership structure towards the cost of capital method by employing WACC (Weighted Average Cost of
Capital) method. The analysis method used in this research is the pathway analysis. The sample selection using
purposive sampling generates 93 observations (31 companies *3 years) manufacturing company in 2011-
2013. The results show that the extent of disclosures concerning the company's information will build investor
confidence in the investment, so that the expected rate of return is low and as a result the company’s incurred
capital costs is low. The low rate of return is due to the disclosure of required information by the company’s
management which would establish investor confidence in the investment.
CÔNG TY CỔ PHẦN CÔNG NGHỆ TIME TRUE LIFE
57 - 59 Hồ Tùng Mậu, Phường Bến Nghé, Quận 1, HCM
Email: long.npb@ttlcorp.vn - Điện thoại: 08.71080888- 08.73080888
Hotline: 0986883886 - 0905710588
IP PBX | Call Center | Network | Contact Center | Hotline 1800 - 1900 | Hosted PBX | IP Centrex | Video Conference
Financial Analysis on Recession Period at M&M TractorsProjects Kart
Financial ANalysis (also stated as financial plan analysis or accounting analysis) refers to an assessment of the viability, stability and profitable of a business, sub-business or project. Visit www.projectskart.com for more information. It is performed by professionals World Health Organization prepare reports exploitation ratios that create use of data taken from monetary statements and different reports. These reports area unit typically given to prime management mutually of their bases in creating business selections.
Effect of Portfolio Diversification on Commercial Banks Financial Performance...inventionjournals
The study examined the effect of portfolio diversification on Commercial Banks financial performance. Mixed method of research design was used and data was collected using questionnaires and interview schedules. Target population was 43 licensed Commercial Banks in Kenya from which one hundred and thirty three (133) managers were randomly selected to form sample size. Validity of the research instruments was ensured through content, face and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis and bivariate regression analysis. The study established a positive statistically significant relationship between portfolio diversification and financial performance. The portfolio diversification explained 68% of the changes in the financial performance of commercial banks in Kenya and that most banks diversify their investments which has enabled them to increase profits and performance in the past years.The study recommended that financial institutions should invest in a combination of assets which are negatively correlated because this maximizes revenue (returns) and minimizes losses (risks). Further study should be undertaken to establish the best combination of assets that can yield an efficient portfolio.
This study examines the underlying components that determine the dividend policy statement of corporations in Nigeria. The study purposively select ninety-four (94) corporations out of the universe of companies listed in the Nigerian Stock Exchange. Financial ratios were extracted and computed from published annual audited financial reports spanning 2007 to 2017. This was informed by the ex-post facto research design adopted to observe key indicators of these corporations in retrospect. The panel regression analysis was used to explain the numerical phenomenon collated. The Durbin-Wu-Hausman specification test found the fixed effect model to be more suitable. The empirical results indicate that financial leverage has a significant negative impact on dividend payout; liquidity has an insignificant positive impact on dividend payout policy; profitability has an insignificant positive impact on dividend payout decision; and company size has a significant positive impact on dividend payout dicision. The study concluses that liquidity, profitability and company size are the determinants of the dividend policy of corporations in Nigeria. More specifically, company size was found to be a major determinant to the dividend policy statement of corporations in Nigeria. The study suggests that, corporations should sustain their liquid positions, asset base and profit levels at all times to meet the universe of desires of their shareholders.
A Study on Factors Influencing Investment Decision Regarding Various Financia...ijtsrd
In the current era of financial inclusion, digitalization and economy driving towards a faster pace, the investors are very much concerned about their savings which can be transferred into investments. The main purpose of investment is to maximize the returns out of it with minimum expenses and risk. There are various factors which affect the investment decision like demographic factors and behavioural biases which decides the type, tenure, amount of the investment. This paper explores that return, advice, tax benefit, liquidity risk appetite of the investors altogether plays a significant part in influencing the investors. Is there any impact of demographic factors like age, gender and income on factors influencing investment decision tried to find out. The results show that factors influencing the investment decision are influenced by income level not by age and gender. Dr. Ankit Jain | Mr Raj Tandel "A Study on Factors Influencing Investment Decision Regarding Various Financial Products" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-6 , October 2020, URL: https://www.ijtsrd.com/papers/ijtsrd33678.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/33678/a-study-on-factors-influencing-investment-decision-regarding-various-financial-products/dr-ankit-jain
Finance is the lifeblood and lifeline of any business entity either commercial or non-commercial. The
Survival, Stability and Sustainability of a firm is highly associated with its financial wellness. It can be observed through its ability to pay(re) short-term as well as long term liabilities, meeting the regular financial obligations, to increase the value of firm and ability to generate profit. Financial analysis, evaluation, and assessment help in determines the financial position and financial strength of a firm. Among the plenty of methods and tolls available for financial performance, ratio analysis is more useful and meaningful. These ratios make it possible to analyze the evolution of the financial situation of a firm (trend analysis), cross-sectional analysis and comparative analysis.
Effect of Dividend Policy on Value Creation for Shareholders of Companies Lis...iosrjce
Several theories have been documented on the relevance and irrelevance of dividend policy. Many
authors continue to come up with different findings from their studies on the relevance of dividend policy. A
company’s management is dealing with competing interests of various shareholders, the kind of dividend policy
they adopt may have either positive or negative effects on the share prices of the company. The effect of a firm’s
dividend policy on the current price of its shares is a matter of considerable importance, not only to
management, who must set the policy, but also to investors planning portfolios and to economists seeking to
understand and appraise the functioning of the capital market. It is on this basis that the study sought to
establish the effect of dividend policy on value creation for shareholders of companies listed in the Nairobi
Securities Exchange. The objectives of the study were to establish the effect of dividend announcement on value
creation for shareholders of companies listed in Nairobi Securities Exchange, to establish the effect of dividend
payout on value creation for shareholders of companies listed in Nairobi Securities Exchange, to determine how
tax incentives influence value creation for shareholders of companies listed in Nairobi Securities Exchange and
to identify how free cash flows influence value creation for shareholders of companies listed in theNairobi
Securities Exchange. A questionnaire was used to collect primary data from the Finance Managers of the public
companies. The data wasanalysed using Regression Analysis, and descriptive statistics through the use of SPSS.
The findings indicated that all the variables contributed positively to value creation of shareholders of
companies listed in the NSE
Study of the Static Trade-Off Theory determinants vis-à-vis Capital Structure...inventionjournals
This paper investigates the application of the Static Trade-Off theory regarding the capital structure of the Pakistani Chemical Industry. We have used panel data analysis for the sample of 31 listed chemical firms from the period 2005 to 2013. The study is unique in its type as unlike to Shah & Hijazi (2005) who studied many industrial sections, this study only focuses on the listed Chemical Firms. We used five independent variables such as Profitability (P), Tangibility (T), Liquidity (L), Firm Size (FS) and Total Assets Growth (TAG) to study the effect on independent variable Financial Leverage (FG). The results confirmed the relationship of Profitability, Liquidity and Firm Size. However the results were not confirmed for Tangibility and Firm Assets Growth. Even though the results for Tangibility were positive, however the significance of the coefficients failed to support the hypothesis. This study hold a unique position for researchers for future research and also has significance for the investors helping them to make wise investment decisions when investing in Pakistani Chemical Industry since this industry holds a major portion of industrial GDP of the country
The major objective of any firm is to maximize the shareholders wealth. This is evidence through dividend yield and payout ratio and this encapsulate into the dividend policy of a company. The research purpose aimed at examining the influence that dividend policy has on the volatility of share prices among the listed insurance corporations in Kenya. Research design, approach and method: Data was collected from listed insurance corporations over a 10-year period with a total of 49 data points. The Pearson correlation and ordinary regression analysis were employed. The results reveal the existence of a positive link among the study variables. The correlations were found to be substantial at ninety-five percent confidence level. It is worth noting that the model summary shows forty-three-point one percent of changes in the volatility of stock price are explicated by dividend yield and payout ratio. ANOVA statistics which examines whether the analytical model as set out in the study explains variations in the dependent variable concluded that the model is analytically substantial. The outcome revealed a statistically significant positive link between stock price variations and the ratio of dividend payout. Research also established a statistically substantial negative interrelation between volatility of stock prices and dividend return. Results therefore recommend that companies should have dividend policies which are mapped to shareholders wealth maximization objective. The study suggests further studies be undertaken to determine whether there exists an analytically substantial difference between the dividend policies of various sectors in the economy.
The Impact of Capital Structure on the Performance of Industrial Commodity an...IJEAB
This paper investigates the impact of capital structure on the performance of commodity and service firms listed on the Vietnamese Stock Exchange. Data used in the paper were collected from the 142 firms listed on Ho Chi Minh and Ha Noi Stock Exchange during time 2009-2015. By using the descriptive statistics and linear regression model, the findings shows that there is negative relationship between capital structure (e.i. STD. LTD and DA) and peformance of the firms (i.e. ROE) for the commodity and services firms listed on two given Stock Exchange Market of Vietnam. Following are possible implications for the study.
The research aims to study the factors that affect the dividends policy at the REITs ,which listed at Kuwait Stock Exchange, using 41 observation of one year, included all 41 REITs, multi linear multi regression model technique was applied. The explanatory variables are, pay-out ratio, cash flow from finance activities, earning per share, assets size, revenues. The study reached to a statistically high significance and positive relationship between dividends per share and all explanatory variables except assets size had no significant effect, also revenue variable had negative relationship with dividends per share.
A Study Of Dividend Policy And Its Effect On Market Value Of Shares Of Select...iosrjce
Dividend policy is a strategy used by a company to determine the amount and timing of dividend
payments. The dividend policy framed by an organization is one of the crucial issues in corporate finance since
it may have an impact on the firm’s value and shareholder wealth. The research study is an attempt to analyze
the effect of dividend policy on shareholder wealth of thirty selected Indian banks listed and traded in Bombay
Stock Exchange (BSE).For the purpose of study the financial data from the period 2003-04 to 2012-13 of
selected Indian banks (15 Public and 15 Private) would be used. The data would be analyzed using statistical
tools like multiple regression technique, t test, the coefficient of determination (R2) and F-Value. The results of
the data analysis might reveal that that there is a significant effect of dividend policy on the share price of
selected Indian Banks. The study is limited to a time period of 10 years and only selected Indian Banks. The
result might change if the time period and number of banks are extended.
Paper Romario_International Conference On Finance 2015Romario Justinus
Representative of Trisakti School Of Management for International Conference On Finance, as presenter of my research jounal, Bali 19-20 Dec 2015 (presenting my research journal). I make research on the topic dividend payout ratio and I presented the research as well as questions and answers in the International Conference On Finance, Bali Dec. 19-20, 2015. The conference was attended by researchers and academics in finance from around the world such as William Megginson of Oklahoma University and Roni Michaely of Cornell University, the results is my research has been the international research journal IFMA (The Indonesian Financial Management Association).
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
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Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
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1. www.ccsenet.org/ijef
International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
Effect of Dividend on Stock Price in Emerging Stock Market: A Study
on the Listed Private Commercial Banks in DSE
Mohammad Bayezid Ali (Corresponding Author)
Department of Finance, Faculty of Business Studies
Jagannath University, Dhaka, Bangladesh
Tel: 88- 017-1502-8151
E-mail: bayezid2001@gmail.com
Tanbir Ahmed Chowdhury, Ph.D
Depaerment of Business Administration, East West University
43-46 Mohakhali C/A, Dhaka-1212, Bangladesh
Tel: 88-011-9913-1645
E-mail: tanbir@ewubd.edu
Abstract
Stock price reactions to the announcement of dividend of the banking industry of Bangladesh are empirically
analyzed. This study examines stock price reactions of listed Private Commercial Banks (PCBs) in Bangladesh
surrounding 44 days of the dividend announcement dates. The major objective of this study is to identify whether
dividend announcement convey any information to the market that results a price reaction for adjusting the dividend
announcement information. The empirical part of this study employs a standard event study methodology to analyze
the stock price reaction for dividend announcement. Out of 25 listed sample banks in the observation period, market
adjusted stock price declines for 11 banks, rises for 6 banks and no changes for 8 banks and statistical pooled t-test
also reveals that stock price reaction to dividend announcement are not statistically significant. Finally, dividend
announcement does not convey any information due to strong contribution of the insider trading as well as some
other influencing factors in the capital market.
Keywords: Dividend, Cumulative Abnormal Return (CAR), Commercial Bank, Free Cash Flow, Price Adjustment
Period, Insider Trading
1. Introduction
The goal of the corporate entities is to maximize the value of the shareholders’ investment in the firm. Managers
pursue this goal through their investment, financing and dividend decision. Investment decision involve with the
selection of positive net present value projects while financing decision involve with selection of a capital structure
that would minimize the cost of capital of the firm (Hamid and Chowdhury, 2005). In addition, managers need to
decide dividend decision on a regular basis that involves with whether to payout earnings to shareholders to reduce
agency problem (Jensen and Meckling, 1976). However the question remains whether paying out of earnings would
essentially create value for the shareholders or not. In this respect, we have found two schools of thought of
dividend policy: (1) dividend irrelevance and (2) dividend relevance. Both of the thoughts have conflict with each
other and none of them provides complete and satisfactory guidelines. However, both of the schools are trying to
establish their thoughts, which led to dividend controversy. A great deal of theoretical and empirical research on
dividend effects has been done over the last several decades. This paper is intended to identify the impact of
dividend announcement information on the stock prices of 25 DSE listed Private Commercial Banks (PCBs) in
Bangladesh in the year 2008.
1.1 Rationale of the Study
In any country, capital market is considered to be a very attractive field for any investment. In case of Bangladesh,
capital market investment is very important and significant for the development and market capitalization of
domestic industry, trade and commerce (Chowdhury, T.A, 2005). However, investors consider several things before
they invest their funds in any particular securities. Among them, so far the most important subject matter is return
from investment in securities that partly depends on dividend announcement in the stock market. On the other hand,
announcement of dividend is considered to be a significant variable for stock price movement. In this paper, we
have tried to identify the impact of dividend announcement on stock prices of private commercial banks listed in
Dhaka Stock Exchange (DSE). We have taken 25 private commercial banks’ stock prices to analyze the impact of
dividend announcement. That’s why this study is important in a sense that investors in DSE might have an idea
about the stock price reaction as a result of dividend announcement in the banking industry and they can use it in
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International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
their investment decision in a more rational and efficient manner. In addition, this study further extends new ways
to study the stock market regarding the impact of dividend announcement on stock price.
1.2 Theoretical Background
Several theories concerning the relationship of dividend policies and stock returns have been documented in the
financial literature (Note: 1) as share price maximization is the central focus in finance. In 1961, Miller and
Modigliani (M&M) advanced the Dividend Irrelevance Theory which theorizes that in a perfect world where there is
no corporate and personal taxes, no transaction and floatation costs, no single individual who can affect a security’s
price through his/ her trade, all individuals have similar expectations with respect to a company’s future investment
and profit, and where a company has a planned and fixed investment policy (Ross et al. 1999), the value of a
company and thus its share prices are unaffected by the distribution of dividends. Hence, the value of a company is
determined solely by the earning power and the risk of its assets but not by the manner in which it splits its earnings
stream between retained earnings and dividends. They argued that an increase in dividend payment should result in a
capital loss to existing shareholders and these two will offset each other. Dividend changes are theorized as
involving the tradeoff between the current income and the future selling price. Though, the validity of the perfect
world is empirically unjustified, the Dividend Irrelevance Theory is crucial for the formulation of further theories
that account for various imperfections in the real world.
One such imperfection which is critical to the development of theories related to dividend is the asymmetric
information problem which lends importance to the Signaling Theory. This is also referred to as the information
content of dividend hypothesis. According to this theory, also found by M&M, dividend announcements are
hypothesized to have information content, whereby managers use cash dividend announcement to signal changes in
their expectation about the future prospect of the company when the markets are imperfect. The information content
inherent in a dividend announcement would cause the shareholders to react to the announcement and thus influence
the company share prices. There are however debates with respect to the form of information content that is being
conveyed to the market through the dividend announcement.
Built on the premise of the information content of dividend hypothesis, other theories have been developed to
explain the nature of information content in a dividend announcement. The cash flow signaling theory, also referred
as the cash flow hypothesis developed by Bhattacharya (1979, 1980), John and Williams (1985) and Miller and
Rock (1985), theorized that dividend changes are explicit signals about the current and/or future cash flows, sent
intentionally and at some costs by management to the company and its stockholders. Miller and Rock assumed
asymmetric information with respect to the magnitude of a company’s current internal cash flow, but symmetric
information to its level of planned investment and value of assets. They studied the impact of dividend payment.
According to them, cash dividend payment is normally associated with a company’s operating cash flow assuming
the amount of investment and external financing is constant. If a company announced dividend payment which is
greater than expected by the market, it reveals an increase of the company’s future cash flow which brings up an
upward movement in its stock price. The theory thus hypothesized that an increase (decrease) in dividend will lead
to an increase (decrease) in stock prices where the levels of cash dividends are associated with the levels of
permanent earnings which would affect the stock value.
Jensen (1986), on the other hand, proposed a theory which is widely known as the Free Cash Flow Hypothesis.
According to Jensen, the free cash flow exists in a company when there are excess funds left over after taking into
account all positive net present value projects. He argues that a conflict of interest between shareholders and
managers over the payment policies of these free cash flows could explain the stock price reaction. The theory
predicts that stock prices will increase if there is unexpected dividend payment. It associates an increase in dividend
with less free cash flow and thus less tendency to over-invest, for example accepting marginal investment projects
that have negative NPVs. In other words, changes in dividend payment signal changes in investment policy.
Similar prediction could also be inferred from the agency cost theory forwarded by Easterbrook (1984). According
to him, the separation of ownership from control would encourage managers to misuse the company’s resources for
their personal gain. A regular cash dividend payment ensures the managers are alert with their actions. If there is a
reduction in dividend, this would increase access to internally generated funds where there is a likelihood of the
management to allocate a greater proportion of the company’s resources into perquisites. In such a case, the agency
cost theory associates cash dividend decrease with a reduction in a company’s equity value, hence a negative price
effect is expected out of the announcement.
1.3 Empirical Evidence
Numerous empirical studies have been carried out to determine the stock market reactions to dividend
announcements. Aharony and Swary (1980), Kwan (1981), Eades (1982), and Woolridge (1982), have found a
Published by Canadian Center of Science and Education
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International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
significant positive association between announcement of dividend changes and the stock return, using the dividend
announcement made in isolation of other firm news report. Gordon (1962 and 1963) and Walter (1963) support the
dividend relevance doctrine. They suggest that dividend policy and investment policy are inter-linked. Investment
policy can not be separated from dividend policy and the choice of an appropriate dividend policy affects the value
of the firm.
The leading proponents of the bird-in-the-hand theory (Gordon, 1962; and Lintner, 1962) found that stockholder
value a dollar received in dividend more highly than dollar earnings retained. Therefore, dividend policy is relevant
to the value of shares. Miller and Scholes (1981) have argued that the observed relationship between common stock
returns and dividend yields as attributed to the favorable information contained in the knowledge that a firm will
actually declare any dividend. Dhillon and Jhonson (1994) examine the stock and bond price reaction to dividend
changes. The positive stock market response to dividend increases has several potential explanations, two of the
more commonly discussed being information content and wealth redistribution between stockholders and
bondholders. The evidence presented by Dhillon and Jhonson (1994) support the wealth redistribution hypothesis
but does not rule out the information content hypothesis. Typically, Dhillon and Jhonson (1994) found that the bond
price reaction to announcement of large dividend changes is opposite to the stock price reaction. Their result differs
from those of Handjinicolaou and Kalay (1984) who analyzed bond returns around dividend changes, and reported
that the bond prices are not affected by dividend increases but the bond prices react negatively to divided reductions.
Dhillon and Jhonson (1994) argue that their data supports the information content hypothesis. In contrast, Jayaraman
and Shastri (1988) find insignificantly negative bond price reactions to dividend announcement.
Black and Scholes (1974) have found that corporations that increase its dividend can expect this will have no
definite effect on its stock price. The price may change temporarily in response to a change in the dividend, because
the market may believe that the change indicates something about the probable future course of earnings. If it
becomes clear that the change was not made because of any change in estimated future earnings; this temporary
effects will disappear. Thus a corporation may want to choose its dividend policies under the assumption that
changes in dividend policy will have no permanent effect on its stock price.
Other researchers made efforts to further understand the dividend controversy. Among them, Brennan (1970 and
1973), Litzenberger and Ramaswamy (1979 and 1980) showed that it is not optimal for the investors to receive
dividends if their marginal tax rate is greater than zero and investors’ after-tax expected rate of return (discount rate)
depends on the dividend yield and systematic risk. This lead to an idea that at least dividend might have some
tax-induced effect on the stock prices. Average investors, subjects to their personal tax rates, would prefer to have
less cash dividend if it is taxable: the size of optimal dividend inversely related to personal tax rates (Pye, 1972).
Hence stock prices tend to decline after announcement of dividend increase.
The empirical studies however showed mixed evidence, using the data from US, Japan and Singapore markets. A
number of studies found that stock price has a significant positive relationship with the dividend payment [Gordon
(1959), Ogden (1994), Stevens and Jose (1989), Kato and Loewenstein (1995), Ariff and Finn (1986), and Lee
(1995)] while other found a negative relationship [Loughlin (1989), and Eason and Sinclair (1989)]. A negative
relationship between dividend announcement stock returns is expected due to tax effect, but researchers tended to
relate the positive relationship between stock returns and dividend announcement with the information effect of
dividend. The dividend information hypothesis postulates that cash dividend carries information regarding the future
cash flows of firm that is to be reflected in the market price of stock after announcement of dividend, particularly
when dividend increases [ Bhattacharya (1979), Bar-Yosef and Huffman (1986) and Yoon and Starks (1995)].
Docking, Scott, Koch and Poul (2005) examined the sensitivity of the investor reactions to the recent direction or
volatility of underlying market movements. They found that dividend change announcements elicit a greater change
in stock price when the nature of the news (good or bad) goes against the grain of the recent market direction during
volatile times. For example, announcements to lower dividends elicit a significantly greater decrease in stock price
when market returns have been up and more volatile. Similarly, announcements to raise dividends tends to elicit a
greater increase in stock price when market returns have been normal or down and more volatile, although this latter
tendency lacks statistical significance. We suggest an explanation for these results that combines the implications of
a dynamic rational expectations equilibrium model with behavioral considerations that link the responsiveness of
investors to market direction and volatility.
Hamid and Chowdhury (2005) used two measures i.e. daily market- adjusted abnormal return (MARR) and daily
cumulative abnormal return (CAR) to study the impact of dividend announcement on shareholders’ value. They
explained MARR as an indicator of the relative daily percentage price change in the dividend paying stocks
compared to the change in average market price. Whereas CAR has been defined as a measure of the investors’ total
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International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
return over a period starting from well before the announcement of dividend to well after the dividend
announcement day. They have taken 137 samples of dividend paying companies listed on Dhaka Stock Exchange
and found that MARR on the day of dividend announcement was not statistically significant which entails that the
market reacts earlier than the actual announcement of dividend. On the other hand, the findings of CAR results that
investors lost more value in the ex-dividend period than the value gained in the pre-dividend period. These findings
also suggest that dividend announcement does not carry information about the future earnings and cash flows of the
companies.
Hossain. M. (2006) examined the determinants of stock price and return movements of listed companies of Dhaka
Stock Exchange (DSE). He used several factors like number of listed securities, number of initial public offerings,
earnings per share, dividend per share dividend pay out ratio and also used some macroeconomic variables like
gross domestic product (GDP), per capital income, savings, investment, export, import, foreign exchange reserve,
inflation rate, money supply, consumption, deposit interest rate, advance interest rate as influential factors for
determining the price of stock. He found a negative relation in between dividend yield and the price of any stock.
Rahman, Z. and Rahman, L. (2008) in their study of stock price behavior around ex-dividend date from DSE found
an increase of stock prices. They have made a conclusion that ex-dividend price increased instead of dropped in
DSE that implies a clear preference for capital gains without having any focus of dividends by the stockholders.
2. Methodology and Sample
To examine the impact of the event - “Dividend announcement” - on the stock prices, we analyzed the stock price
behavior of the selected private commercial banks surrounding 44 days of the date of dividend announcement of
DSE. Given the depth of information available about the stock prices from Dhaka Stock Exchange (DSE), our null
hypothesis is that dividend announcement don’t have any significant impact on the stock price movement of the
banks listed in DSE. Symbolically,
H 0 : Dividend announcement doesn’t contain price sensitive information.
H A : Dividend announcement contain price sensitive information.
2.1 Sample Selection
This study covers the impact of dividend announcements on the stock price of all the listed private commercial
banks at DSE between January 2008 and September 2008. During our selected sample time frame we found 29
listed private commercial banks at DSE. At the initial stage, we have taken all the listed private commercial banks.
Then we have selected banks as our sample banks on the basis of the following two methodological conditions
which are (a) The banks which had declared their dividend 30 days after January 1, 2008 and (b) The banks which
had announced their record date within September 30, 2008. The above two conditions are highly significant for
ensuring stock price data, dividend announcement date and record date are perfectly compatible with the
methodology used in this study; to avoid unnecessary complicacy; to get an unbiased result and also for numerous
reasons.. However, we are not in a position to incorporate 4 listed private commercial banks within our sample
frame for the following reasons: (i) United Commercial Bank Ltd. (UCBL) had announced their record date but that
was far away from our sample time frame; (ii) Rupali Bank was imposed restriction by Securities and Exchange
Commission (SEC) in trading securities due to major restructuring process in their ownership status which went on
within our sample time frame; (iii) ICB Islamic Bank Ltd was found newly established bank having no data about
dividend announcement date and record date within our sample time frame; (iv) Brac Bank involves with only 20
days trading data before the dividend announcement date that matches within our sample time frame. But we require
30 days trading information before the dividend announcement date to comply perfectly with the methodological
issue explained in earlier. According to these sample selection criteria, finally we have selected 25 out of 29 listed
private commercial banks at DSE
Moreover, to capture the only impact of dividend announcements, 25 banks that have price sensitive information
around the date of dividend announcements are taken into consideration for this research. In this regard, declaration
of rating agency’s report, earnings, right share offer, mergers etc were also considered as price sensitive information.
We have excluded all the price sensitive information (except dividend announcement date and record date), which
Hand et al (1992) refers to as ‘contaminated events’.
2.2 Event Window
In conducting the event study it is important to identify the period over which the prices of relevant financial
instruments will be examined. This period is referred to as ‘event window’ (Campbell, Lo and Mackinley, 1997).
For the purpose of this study, an event window is set equal to 44 days starting from 30 days before the dividend
announcement date and ending 14 days after the announcement (Figure: 2). The date of dividend announcement is
Published by Canadian Center of Science and Education
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International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
defined as t= 0, a window of 30 days before the event as ‘pre-event window’ and a window of 14 days after the
event divided equal to two equal parts as ‘post- event window’. The date of dividend announcement i.e. t = 0 has
been considered as the date of declaration related to dividend distribution by the respective Board of Directors of the
banks.
The ‘post-event window’ is sub-divided into two intervals: +1 to +7 days price impact after no price limit date after
the dividend announcement date defined as ‘price adjustment period’ and another +1 to +7 days price impact before
record date defined as ‘market response to the period of availing dividend benefit’. The impact of dividend
announcement is tested over two interval of post-event window because not all price reaction are not due to divided
announcement, sometimes stock price changes only to avail dividend benefit. The entire price impact could better be
materialized in the two intervals (Figure: 1)
2.3 The Event Study Approach
The event study methodology is well accepted and has been used in a variety of management research to study the
effect on the economic value of firm actions such as e-commerce (Subramani et al. 2001), CEO incentives (Kang et
al. 2006), new product introductions (Chaney et al. 1991), earnings press releases (Elaine Henry 2006) etc.
In analyzing the impact of the event - “Dividend announcement” - we intended to use Standard Event Study
Technique suggested by Campbell, Lo and MacKinley (1997) that examines abnormal return of the stock prices in
the event window. Abnormal returns (ARit) are defined as the difference between actual returns and the returns
predicted by the market model:
ˆ
ˆ
ARit Rit ( i i Rmt )
If any information resulting from an event is believed to affect a firm's current and future earnings, its security price
changes as soon as the market learns about the event. To examine whether an event had any impact on the firm's
values, pre event and post event abnormal returns (ARs) and cumulative abnormal returns (CARs) are measured.
Conclusions are drawn on the test results of statistical significance of cumulative abnormal returns (CARs).
But, form of our market efficiency pushes us back in using the standard event study technique. Initially, we followed
standard event study model of Campbell, Lo and MacKinley (1997) and developed a market model for determining
the predicted returns of a relevant sample. The daily equity price return for the relevant company (Rit) was regressed
ˆ ˆ
upon the corresponding industry index (Rmt) using ordinary least square method. The parameters , were
estimated over a three month period preceding the event. The benefits of using this model depend on coefficient of
determination R2 that measures the strength of linear relationship between two variables. But in most of the cases, it
is observed that adjusted R2 between two variables were very low that signifies a very low relationship between the
industry index and the individual company price index. As it is known that index comprises both frequently and
infrequently traded shares. In addition, it is also known that frequently traded shares cause upward bias and
infrequently traded shares cause downward bias. That’s why we depart from using this model that calculates
abnormal returns to study the impact of the event. We subsequently develop an alternative approach appropriate to
our market that avoids regression model but considers the movement of industry index.
2.4 Alternative Approach: Market Adjusted Returns
After excluding all the ‘contaminated samples’ from the primary list, a final size of 25 samples have been
constructed. To test the hypothesis, market adjusted equity prices of these samples in the event windows will then be
analyzed. Justification for considering market adjusted equity prices (Adj Rit) over raw equity prices (Rit) is to isolate
the movement of financial prices in the event window that is not due to factors influencing the industry index.
Market adjusted equity prices neutralize the price movement from the movements caused by the industry index1. For
pre-event window market adjusted price of an equity (i) for a day (t) is calculated as:
Adj Rit
R it
x100
100 30 day Av. Industry Index Growth
On the other hand, for post-event window (both for 7 days after no price limit date associated with dividend
announcement or price adjustment period and 7 days before record date or market response to the period of availing
dividend benefit), market adjusted price in the post-event window of an equity (i) for a day (t) (Note 2) is calculated
as:
Adj Rit
R it
x100
100 7 day Av. Industry Index Growth
To examine the hypothesis, aggregate market adjusted equity returns (AR) for a day (t) have then been calculated,
summing across the prices of all 25 banks in the event window.
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Adj
R
t
( AR
t
)
International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
25
Adj
i 1
R
it
The market adjusted equity returns behavior for each day are then observed between two windows, pre-event
window (30 days before the dividend announcement date) and post-event window (7 days after no price limit date
related to dividend announcement and 7 days before record date ), to draw the conclusion.
3. Testing Hypothesis
The null hypothesis of this study is that dividend announcement doesn’t contain price sensitive information i.e.
dividend announcement doesn’t have any significant impact on stock prices of the selected banks and our alternative
hypothesis remains that dividend announcement significantly affect (upsurge) the stock prices of the selected
banking entity. Assuming that prices of both windows are normally distributed and are independent of each other;
statistical significance of the hypothesis has been tested using pooled t-test at 95% confidence level. Correlation
analysis between adjusted stock return during 30 days before dividend announcement date and 7 days after no price
limit date associated with dividend announcement as well as 30 days before dividend announcement date and 7 days
before record date will also be conducted to test our hypothesis.
3.1 Empirical Results
Impact of dividend announcement on stock prices behavior of 25 selected private commercial banks has been
analyzed. Dividend announcement generates a very low significant impact on the stock price movement. The
adjusted mean return index of the stocks 30 days before dividend announcement is tk.98.28 whereas the adjusted
mean return index in the price adjustment period (7 days after the no price limit date related to dividend
announcement) is tk.100.09 and 7 days before the recode date is tk.105.25. In this case, stock price increases by
1.84% in the price adjustment period after the dividend announcement and 7.09% in the period when investors
wishes to avail the dividend benefit (7 days before record date). Thus it is evident that dividend announcement has a
very less significant impact on stock price changes in the price adjustment period. But a relatively higher rate of
increase takes place in 7 days before record date. A list of mean return as well as their standard deviation from 25
private commercial banks during 30 days before dividend announcement date, 7 days after no price limit date and 7
days before record date is given in Table: 1 & 2. Figure 2 demonstrates the result (Note: 3).
The graph in Figure: 2 reveal the movement of stock prices around the dividend announcement date. Its depicts that,
during 30 days before the dividend announcement date, stock price index is lower than average stock price index.
Stock price index rises very little (1.84%) in the next 7 days after the dividend announcement date. In addition,
another rise in stock price index (7.09%) is found just 7 days before the record date. The first reaction in stock price
was actually due to dividend announcement and the later was due to market response to avail the dividend benefit. A
break in the curve was due to differences in time lag for different banks between dividend announcement date and
record date Based on this curve, we can say that the impact of dividend announcement on stock price is very
insignificant in 7 days after the dividend announcement date but a rise in stock price is found 7 days before the
record but that is not due to dividend announcement and also less significant to dividend announcement.
On the other hand, individual stock index for different banks shows different reactions to dividend announcement
(Figure: 4). Bank Asia, The Premier Bank, Dhaka bank, Trust Bank Shahjalal Islami Bank, IFIC Bank, Social
Investment Bank, National Bank, Prime Bank belong to that category where dividend announce results decrease in
stock price index immediately 7 days after no price limit date related to dividend announcement.. Mutual Trust Bank,
AB Bank, EXIM Bank, One Bank, NCC Bank and Standard Bank are found having stock index less than average
index in 30 days before dividend announcement but that moves to average index 7 days after the dividend
announcement. Al-Arafah Islami Bank, Jamuna Bank, Pubali Bank, and Uttara Bank shows no price reaction in both
pre-event and post-event window. But only three banks (i.e. The City Bank, Mercantile Bank, and South East Bank)
show an upward rise in stock index after the dividend announcement date. A rise in stock price index is found in
almost every bank during the period of 7 days before the record date and it was the price reaction only to avail the
dividend benefit (Note: 4). On an average, this study found no significant price reaction as a result of dividend
announcement.
While our study provide evidence that stock price have no significant response to the dividend announcement,
statistical significant test also resembles to out result. In case of parametric pooled t-test, p-value is greater than 5%
level of significance providing acceptance to our null hypothesis that dividend announcement doesn’t contain price
sensitive information. On the other hand, there is a very high degree of association in between stock price during 30
days before dividend announcement date and 7 days after the dividend announcement date (i.e. r = 0.976) (Table: 3)
and also the stock price during 7 days before that record date (i.e. r = 0.986). This correlation output also agrees with
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our evidence that dividend announcement have no significant impact on the stock price movement of the selected 25
private commercial banks in Bangladesh.
4. Conclusion
A standard event study methodology is used to investigate the effect of dividend announcement on stock price. The
findings accept our null hypothesis and provide no strong evidence that stock price reacts significantly on the
announcement of dividend. This may be due to insider trade in the market, so, the information used to be adjusted
with the stock prices before announcement and consequently the announcement of dividends do not carry any new
information to the market. Furthermore insider trading causes asymmetric information in the market and as insiders
have private information, so outsiders love to follow the insiders to buy and sell shares. Therefore shareholders are
always mislead because of asymmetric information and consequently positive information about dividend also
become an ineffective device in the market. As the DSE is still in the speculation and manipulation stage, so
speculators play their role in the market for short- term period. However it is notable that insiders, brokers and the
exchange employees are the speculators of the market and as these informed speculators play their role in the market
for short-term gain that causes dividend information ineffective. As a result announcement of dividend generates no
significant impact on the movement of stock prices.
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Notes
Note 1. Implication of Corporate Finance Theories in Predicting the Sign of Abnormal Returns Associated with
Dividend Announcement
Theory
Dividend Announcement
Cash Flow Signaling Theory/ Information
Increase
Content Hypothesis
Decrease
Expected Price Effect
Positive price effect
Negative price effect
(signal current and/or future cash flows)
Jensen’s Free Cash Flow Hypothesis
Increase
Positive price effect
Decrease
Negative price effect
(signal changes in investment policy)
Agency Cost Theory
Decrease
Negative price effect
(misuse of funds)
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International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
Note 2. In order to neutralize the price movement, two separate weighted average industry indices for banking
industry were developed. For banking industry price index January 1, 2008 were considered as the base price.
Note 3. The graph has been drawn from the market adjusted equity prices, calculated as per methodology, considering the event
day ( t 0 ) price as 100.
Table 1. Mean and Standard Deviation of Pre-event and Post-event Window
Pre-event Window (30 Days before
Sl
No
Post-event Window (7 days after no
Dividend Declaration Date)
Name of the Banks
N
Mean
2891.24
Price Limit Date)
Std. Deviation
N
Mean
Std. Deviation
219.25
7
3274.16
86.60
1
AB Bank
30
2
AL-ARAFAH ISLAMI BANK LTD.
30
396.68
8.81
7
363.47
7.72
3
BANK ASIA LIMITED
30
519.08
18.76
7
511.59
8.32
4
DHAKA BANK LIMITED.
30
632.01
21.61
7
585.86
8.57
5
DUTCH BANGLA BANK LTD.
30
7893.61
818.19
7
11551.43
955.07
6
EASTERN BANK LIMITED.
30
1024.64
13.32
7
1290.67
27.96
EXPORT IMPORT BANK OF BD.
7
LTD.
30
377.94
8.71
7
393.67
2.64
8
IFIC Bank
30
2838.35
102.59
7
2950.29
42.48
LIMITED.
30
5869.82
155.45
7
5703.95
80.49
10
Jamuna Bank Ltd.
30
301.95
12.32
7
294.13
7.02
11
MERCANTILE BANK LIMITED
30
412.44
5.14
7
414.11
4.08
12
MUTUAL TRUST BANK LTD.
30
534.08
22.37
7
553.73
2.60
13
NATIONAL BANK LIMITED.
30
1564.49
60.62
7
1529.12
22.56
14
NCC Bank
30
446.65
10.36
7
15
ONE BANK LIMITED
30
514.17
40.98
7
489.45
16
PRIME BANK LTD.
30
883.48
11.22
7
872.93
6.19
17
PUBALI BANK LIMITD.
30
845.38
19.05
7
855.01
24.96
18
SHAHJALAL ISLAMI BANK LTD.
30
354.03
6.11
7
344.53
3.14
19
SOCIAL INVESTMENT BANK LTD.
30
411.15
22.69
7
345.55
3.51
20
SOUTHEAST BANK LIMITED.
30
539.76
14.26
7
543.12
8.23
21
STANDARD BANK LIMITED
30
279.87
13.72
7
291.02
1.84
22
THE CITY BANK LIMITED.
30
619.75
9.85
7
600.86
14.65
23
The Premier Bank Ltd.
30
267.31
6.95
7
230.09
2.04
24
Trust Bank Limited
30
670.96
48.04
7
594.89
24.29
25
UTTARA BANK LIMITED.
30
162.97
7
4628.37
50.60
ISLAMI BANK BANGLADESH
9
60
4741.55
448.06
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4.73
18.62
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International Journal of Economics and Finance
Vol. 2, No. 4; November 2010
Table 2. Mean and Standard Deviation of Pre-event and Post-event Window
Pre-event Window (30 Days before
Sl
No
Post-event Window (7 days Before
Dividend Declaration Date)
Name of the Banks
Record Date)
N
Mean
Std. Deviation
N
Mean
Std. Deviation
219.25
7
3571.18
144.53
1
AB Bank
30
2891.24
2
AL-ARAFAH ISLAMI BANK LTD.
30
396.68
8.81
7
558.69
7.25
3
BANK ASIA LIMITED
30
519.08
18.76
7
523.46
4.44
4
DHAKA BANK LIMITED.
30
632.01
21.61
7
580.09
6.15
5
DUTCH BANGLA BANK LTD.
30
7893.61
818.19
7
13047.38
444.41
6
EASTERN BANK LIMITED.
30
1024.64
13.32
7
1220.34
18.07
7
EXPORT IMPORT BANK OF BD. LTD.
30
377.94
8.71
7
444.67
7.84
8
IFIC Bank
30
2838.35
102.59
7
3038.58
95.57
9
ISLAMI BANK BANGLADESH LIMITED.
30
5869.82
155.45
7
7525.34
417.18
10
Jamuna Bank Ltd.
30
301.95
12.32
7
278.06
8.14
11
MERCANTILE BANK LIMITED
30
412.44
5.14
7
411.21
2.18
12
MUTUAL TRUST BANK LTD.
30
534.08
22.37
7
557.22
5.61
13
NATIONAL BANK LIMITED.
30
1564.49
60.62
7
1512.73
18.70
14
NCC Bank
30
446.65
10.36
7
15
ONE BANK LIMITED
30
514.17
40.98
7
514.95
16
PRIME BANK LTD.
30
883.48
11.22
7
864.43
6.40
17
PUBALI BANK LIMITD.
30
845.38
19.05
7
843.15
13.04
18
SHAHJALAL ISLAMI BANK LTD.
30
354.03
6.11
7
345.64
4.10
19
SOCIAL INVESTMENT BANK LTD.
30
411.15
22.69
7
418.35
12.66
20
SOUTHEAST BANK LIMITED.
30
539.76
14.26
7
555.48
3.81
21
STANDARD BANK LIMITED
30
279.87
13.72
7
290.60
1.48
22
THE CITY BANK LIMITED.
30
619.75
9.85
7
625.92
10.30
23
The Premier Bank Ltd.
30
267.31
6.95
7
236.40
6.11
24
Trust Bank Limited
30
670.96
48.04
7
598.69
15.20
25
UTTARA BANK LIMITED.
30
162.97
7
5716.22
81.48
4741.55
459.52
7.03
16.99
Table 3. Hypothesis Test: Independent Groups (t-test, pooled variance)
Mean
1,433.216067
1,966.923210
25
Mean
1,586.402745
2,522.231583
25
48
-153.1866786
5,115,219.5372294
2,261.6851101
639.7011513
0
-0.24
.8118
Published by Canadian Center of Science and Education
mean
std. dev.
n
df
difference (Mean - Mean)
pooled variance
pooled std. dev.
standard error of difference
hypothesized difference
t
p-value (two-tailed)
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International Journal of Economics and Finance
t = -30
t=0
Vol. 2, No. 4; November 2010
t=7
Pre-event Window (30 day)
-
t=7
Post-event window
-
(7 days after the no price limit date
+ 7 days before record date)
Figure 1. Pre-event and Post-event Window
108
106
104
102
100
98
96
94
92
-30
-28
-26
-24
-22
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
9
11
13
Event Period
Figure 2. Adjusted Stock Prices in the Time Frame
AB Bank
Al-Arafah Islam i Bank
140
160
120
140
100
120
80
100
60
80
60
40
20
40
20
0
-30
0
8
0
14
- 30
Bank Asia
0
8
14
Dhaka Bank
115
110
110
105
105
100
100
95
95
90
90
85
85
- 30
0
8
- 30
14
Dutch Bangla Bank
0
8
14
Eas te rn Bank
120
200
100
150
80
60
100
40
50
20
0
0
- 30
62
0
8
14
- 30
0
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International Journal of Economics and Finance
IFIC Bank
EXIM Bank
140
Vol. 2, No. 4; November 2010
110
120
105
100
100
80
95
60
90
40
85
20
80
0
-30
-30
0
8
0
8
0
8
14
14
Jam una Bank
Islam i Bank Bangladesh
120
140
100
120
100
80
80
60
60
40
40
20
20
0
-30
0
8
0
14
-30
Mercantile Bank
14
Prim e Bank
106
106
104
104
102
102
100
100
98
98
96
96
94
94
92
-30
0
8
92
14
-30
0
8
14
Mutual Trust Bank
The Prem ier Bank
115
105
110
100
105
95
100
90
95
85
90
80
75
85
-30
0
8
14
- 30
0
8
14
NCC Bank
National Bank
104
102
110
100
105
98
100
96
95
94
90
92
85
90
88
80
-30
0
8
14
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- 30
0
8
14
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Vol. 2, No. 4; November 2010
Pubali Bank
One Bank
120
120
100
100
80
80
60
60
40
40
20
20
0
0
-30
0
8
14
- 30
0
8
14
Social Investm ent Bank
Shahjalal Islam i Bank
140
110
120
105
100
100
80
60
95
40
90
20
85
0
- 30
0
8
14
- 30
South East Bank
0
8
14
8
14
8
14
Standard Bank
110
105
105
100
95
100
90
95
85
90
80
75
85
-30
0
8
14
- 30
0
The Trust Bank
The City Bank
115
140
110
120
100
105
80
60
100
40
95
20
90
0
- 30
0
8
14
0
8
14
- 30
0
Uttara Bank
140
120
100
80
60
40
20
0
- 30
Figure 3. Stock Price Movements of Banks around the Date of Dividend Announcement (Price of the event day is
considered as tk.100 and the same is adjusted with the pre-event and post-event window)
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