Does Dividend Announcement Generate Market Signal? Evidence from Pakistan

This study is aimed at investigating the signaling effect of cash dividend announcements by employing the standard event methodology over the companies listed on Karachi Stock Exchange. The companies are randomly selected from different sectors that have announced cash dividends during calendar year 2010 and total 30 companies are included in the study. The standard event methodology is applied to explore the impact of cash dividend announcements upon stock returns and an event window of 15 days with dividend announcement date as the event day is constructed. The results show that the average abnormal returns, by and large, remained positive and statistically significant in post-event window days. The results of study tend to support dividend signaling hypothesis indicating that the dividend announcement may be used as a tool to generate positive signals in the market. Keywords: Dividend Announcements, Event Window, Abnormal Returns and t-Test JEL Classifications: F65; G

Impact of Corporate Governance Measures on Earnings Quality: Evidence from Pakistan

The purpose of this study is to examine the impact of corporate governance on earnings quality of the manufacturing firms listed on Karachi Stock Exchange. Whereas, earning quality of the firm has been addressed by earnings management and discretionary accruals used to measure the level of earnings management. In this study Jones Model has been used to calculate discretionary accruals. Moreover, we had used four characteristics to capture the effect of corporate governance like audit quality, CEO duality, board size and gender diversity and two control variables firm size and leverage. Findings of the study disclose significant negative impact of audit quality and board size on earnings management, while the relationship between firm size and earnings management is positively significant. Keywords: Earnings Management, Corporate Governance, Pakista