Dividend announcement and share price behaviour: A study of selected Indian companies

Dividend policies of companies and their impact on market share prices have been important topic for debate worldwide. The announcements of dividend amount and time of payment by Indian companies is done at different dates by different companies. The opinions and views of financial experts and researchers regarding the effect of dividend announcements on the market share prices vary from each other. According to some studies, dividend announcements by companies do lead to fluctuation in their share prices, while others are of view that dividend payout policy does not affect market share price and company value, leading to hypothesis that dividend policy is irrelevant. This study makes an attempt to understand the effect of dividend announcements on their share prices, number of trades number of shares, and total turnover by top BSE index companies by market capitalization. The findings of the study with the help of event study methodology reveals that the dividend announcements by the sample companies have significance influence on the market Share Prices, Number of Shares, Number of Trades and Total Turnover.