Business, Management and Accounting
8 years ago

Stock prices soar with dividend increases, signaling firm strength and growth!

International Journal of Financial Management
Stock Price Reaction to Dividend Announcements
Shaveta Gupta, Balram Dogra, A. K. Vashisht, Shevata Ghai

Paper Summary

Stock prices react to dividend announcements, with increases leading to positive returns and cuts resulting in negative returns. Companies use dividend changes to signal their financial health to investors. A study of 65 dividend increase announcements by 28 companies on the BSE 30 Sensex from 2006-09 showed that stock prices do respond to dividend increases, indicating a signaling effect. The research also revealed that the Indian stock market is inefficient.

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