Location of Repository

Dividend policy and behaviour, and security price reaction to the announcement of dividends in an emergency market : a study of companies listed on the Dhaka stock exchange\ud

By A.Sabur Mollah

Abstract

'The harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don't fit together'(Black 1976, p. 5). A number of researchers provide\ud insights, theoretical as well as empirical, into the dividend policy puzzle. However, the issue as to why firms pay dividends is as yet unresolved. Several rationales for the corporate dividend policy propose in the literature, but there is no unanimity among researchers. Everyone, however, agrees that the issue is important, as dividend\ud payment is one of the most commonly observed phenomenon in corporations worldwide.\ud \ud Several studies have been conducted on dividend policy and behaviour, and security price reaction to the announcement of dividends but a very few studies have been conducted on emerging markets, therefore, a quite lot of issues of the emerging markets are still unresolved. Therefore, the existing published evidence is of limited relevance in identifying the appropriate dividend policy and behaviour, and security price reaction to the announcement of dividends in an emerging market.\ud \ud The objectives of this thesis are threefold: firstly, to identify the detenninants of dividend policy, secondly, to investigate the dividend behaviour, and thirdly, to identify the security price reaction to the announcement of dividends in an emerging market.\ud \ud The empirical results identify leverage, size, insider ownership, and collateralizable assets as the major determinants of dividend policy. However, the empirical results document that dividend decision is primarily governed by cash flow for measuring the capacity of the companies to pay dividends and dividends paid in the\ud previous years, i. e., lagged dividends. The empirical results also identify Britain's (1966) partial adjusted model as the best-fit dividend behavioural model. Furthermore,as insiders trade in the market, so, information used to be adjusted with the share\ud prices before announcement and consequently dividend announcement does not carry any new information to the market. Therefore, the empirical results document no\ud significant impact of dividend announcements on the security prices of an emerging market. Finally, the empirical results identify that the emerging markets are inefficient

Publisher: Leeds University Business School
Year: 2001
OAI identifier: oai:etheses.whiterose.ac.uk:700

Suggested articles

Preview

Citations

  1. (1971). A Cross-section Study of the Relationship Between Dividends and Investment", Yale Economic Essays (Spring-Fall),
  2. (1987). A Financial Profile of the Dividend Initiating Finn", doi
  3. (1980). A Heteroskedasticity Covariance Matrix Estimator and a Direct Test for Heteroskedasticity", doi
  4. (1963). A Simplified Model for Portfolio Analysis", doi
  5. (1976). Comments on 'Infon-national Content of DIvidends",
  6. (1976). Comments on the Impact of Dividend and Earnings Announcements: A Reconciliation", doi
  7. (1974). Competitive and Optimum Responses to Signals: An Analysis of Efficiency and Distribution", doi
  8. (1999). Determinants of Dividend Policy: Regulated Versus Unregulated Firms", Paper Presented at the Financial Management Association Conference.
  9. (1983). Dividend Changes and Security Prices", doi
  10. (1985). Dividend Cuts: Do They Always Signal Bad News? ",
  11. (1963). Dividend Policy: Its Influence on the Value of the Enterprise", doi
  12. (1977). Estimating Betas from Nonsynchronous Data", doi
  13. (1984). Explaining Investor Preference for Cash Dividends", doi
  14. (1996). Finn Perfon-nance, Ownership, Financial Structure and Compensation: The Role of Institutional Shareholders in the
  15. (2001). Fundamental of Financial Management"', Upper Saddle River,
  16. (1982). Growth, Beta and Agency Costs as Determinants of Dividend Payout Ratios",
  17. (1983). Industry, Market Structure, and Informational Content of Financial Structure", doi
  18. (1986). Information Asymmetry and the Dealers Bid-ask Spread: A Case Study of Earnings and Dividend Announcements", doi
  19. (1984). New Evidence That Taxes Affect the Valuation of Dividends", doi
  20. (1979). On Financial Contracting: An analysis of Bond Covenants",
  21. (1992). Report on the Dhaka Stock Exchange", TIle Asia Foundation,
  22. Reports (1997-98), "The World Bank: doi
  23. (1982). Repurchase Offers: Information Adjustment Premium and Shareholders' Response",
  24. (1984). Repurchase Tender Offers, Signalling, and Managerial Incentives", doi
  25. (1976). Should a Corporation Repurchase its Own Stock? ", doi
  26. (1966). Small Sample Bias Due to Misspecification in the 'Partial Adjustment' and 'Adaptive Expectations' Models", doi
  27. (1963). The Chittagong Stock Exchange, Bangladesh: NvNvNv. csebd. org
  28. (1968). The Corporate Dividend Decision: A Cross-section Study of tile Relationship between Dividend and Investment", doi
  29. (1977). The Detennination of Financial Structure: The Incentive Signalling Approach",
  30. (1998). The Dhaka Stock Exchange, Bangladesh: www. dsebd. org The Dhaka Stock Exchange doi
  31. (1979). The Dividend Questjon", The Wall Street Joumal
  32. (1991). The Ex-dividend Behavior of Non-convertible Preferred Stock Returns and Trading Volume", doi
  33. (1976). The Impact of Dividend and Earnings Announcements: Reconciliation", doi
  34. (1991). The Impact of the 1986 Tax Reform Act on Ex-dlvldend Day Retums",
  35. (1982). The Information Content of Dividend Changes",
  36. (1973). The Information Contents of Dividend",
  37. (1992). The Investment Opportunity Set and Corporate Financing, Dividend, and Compensation", doi
  38. (1990). The Market Valuation of Cash Dividends and the Tax Differential Theory of Dividend Policy: A Case Revisited", doi
  39. (1986). The Market Valuation of Cash Dividends", doi
  40. (1985). The Relevance of Corporate and Personal Taxes for Financing Decisions and Security Pricing: Evidence from the 1982-1983 Belgian Tax Refonn",

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.