*Dean, FMG Academy, Greater Noida, Uttar Pradesh, India
**Assistant Professor, SOMS, IGNOU, New Delhi, India
***Assistant Professor, Rawal Institute of Management, Faridabad, Haryana, India
Online published on 4 December, 2014.
In 1980’s Indian Government had started promoting Automobile industry allowing foreign direct investment and other such liberalized norms for its growth and prosperity. Suzuki and Toyota of Japan and Hyundai of South Korea were allowed to invest in Indian Automobile market leading to its development. By the end of 20th century, there were 12 large automobile companies set up in India which were the result global companies’ investment. This sector has gradually evolved as a significant contributor in economic development of the nation.
The events like mergers/acquisitions, bonus announcement, stock split etc. may affect prices of stocks in a market. However, dividend announcement may be regarded as the most signaling event which can be discounted by stock prices. A decadal study from 2001–10 has been attempted in the present paper based on Capital Asset Pricing Model. The Paired Sample t-test, Wilcoxon Signed Rank test and Sign test have been used as statistical tools. The study found a significant effect of dividend announcement on the abnormal stock returns of Automobile industry in India.
CARs, Beta, CAPM, Risk-free rates, Market rate of return
