Declaration Effect of Cash & Stock Dividends on Share Price: An Empirical Study on Dhaka Stock Exchange

Md Lutfor Rahman, Mohammad Ruhul Amin and Md. Noman Siddikee ()
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Md Lutfor Rahman: Northern University Bangladesh
Mohammad Ruhul Amin: Northern University Bangladesh

Asian Business Review, 2012, vol. 1, issue 1, 72-79

Abstract: This study analyzes the impact of different types of dividend declaration, namely stock and cash dividends. Using event study method, MAAR and CAAR, this study found no evidence of abnormal returns on the declaration day for either of the types of dividends. However, significant negative returns are reported on days prior to the declaration day for stock dividend, indicating speculative nature of the investors. Furthermore, it provides positive returns during the post-announcement period as the investors realize the chance of potential gains. However, as far as cash dividend is concerned companies listed under DSE do not provide any significant abnormal returns during the 60 days event window. For CAAR, no significant return is reported for cash dividend, while stock dividend provided a maximum 5.6% abnormal returns during the post announcement period.

Keywords: Cash Dividends; Stock Dividends; Share Price; Dhaka Stock Exchange (search for similar items in EconPapers)
JEL-codes: D24 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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