scholarly journals Market Reaction to Stock Dividends: Evidence from India

2014 ◽  
Vol 39 (4) ◽  
pp. 55-74 ◽  
Author(s):  
Chhavi Mehta ◽  
P K Jain ◽  
Surendra S Yadav
Keyword(s):  
Market Reaction ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Board Meeting ◽  
Net Worth ◽  
Agenda Item ◽  
Long Run ◽  
Dividend Announcements ◽  
Stock Dividends ◽  
Stock Dividend

Theoretically, stock dividends have no impact on financial position of the announcing company as net worth and total assets remain the same, though empirical evidence across the globe shows that markets react to stock dividend announcements. The present study analyses the market reaction pertaining to stock dividend decisions in the Indian context. Market reaction has been captured in terms of impact on returns, liquidity, and risk. The sample includes 51 ‘pure’ stock dividend announcements from January 1, 2002 to June 30, 2010. The study finds that the announcement of stock dividends induces an increase in the wealth of the shareholders in India. A consistent pattern of positive average abnormal returns during the pre-announcement window till the announcement day and a pattern of negative average abnormal returns during the post-announcement window have been observed. On cumulating these results, the shareholders of the companies that issued stock dividends gain significant returns. The justification for such results seems to be that the information about the stock dividends announcement reaches the investors prior to the decision date as it is manda-tory for the issuing company to inform the exchange (where it is listed) about the date of the board meeting. It has been observed that the companies usually inform the exchange seven days prior to the day of the board meeting. In most of the cases, the companies provide the agenda item information along with the board meeting date to the exchange. In such a situation, the moment this information about the agenda item is given to the exchange, this becomes public information and investors start reacting to it. The cumulative average abnormal return values over various size event windows depict that an investor can earn substantial returns if he purchases the shares on the day the news of board meeting (to announce stock dividends) comes to the market and sells them one day after the announcement day. The investor can also gain if the shares are purchased one day prior to the announcement day and are sold one day after the announcement day. The trading quantity reduces significantly immediately after these decisions are announced. On a short-term basis, the investors seem to perceive that the announcement of stock dividends provides signals about the firm's bright future prospects. This leads to a decline in trading quantity as investors, who own the shares at the time of announcement, prefer to hold the shares expecting an increase in their wealth in future. In the long-run, a marginally positive impact has been observed. The announcement of stock dividends reduces variability of returns in the short-run as well as in the long run, lending price stability to the stocks of the announcing companies.

Long-Run IPO Performance Analysis of German and Spanish Family-Owned Businesses

2005 ◽  
Vol 18 (3) ◽  
pp. 179-202 ◽  
Author(s):  
Peter Jaskiewicz ◽  
Víctor M. González ◽  
Susana Menéndez ◽  
Dirk Schiereck
Keyword(s):  
Stock Market ◽  
Initial Public Offerings ◽  
Family Involvement ◽  
Positive Impact ◽  
Market Performance ◽  
Abnormal Returns ◽  
Negative Influence ◽  
Ipo Performance ◽  
Long Run ◽  
Stock Market Performance

This article examines the long-run stock market performance of German and Spanish initial public offerings (IPOs) between 1990 and 2000. We distinguish between family-and nonfamily-owned business IPOs by using the power subscale of the F-PEC. Buy-and-hold-abnormal returns (BHAR) are calculated in order to determine abnormal returns. Our results show that three years after going public, investors, on average, realized an abnormal return of − 32.8% for German and − 36.7% for Spanish IPOs. In both countries, nonfamily business IPOs perform insignificantly better. Regression analyses show that for the whole sample there is a positive company size effect. In family-owned businesses, strong family involvement has a positive impact on the long-run stock market performance, whereas the age of the firm has a negative influence.

scholarly journals After Sarbanes-Oxley: Market reaction to the appointment of outside directors

2006 ◽  
Vol 3 (3) ◽  
pp. 190-198
Author(s):  
Hatice Uzun ◽  
Elizabeth Webb
Keyword(s):  
Audit Committee ◽  
Market Reaction ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Outside Directors ◽  
Stock Market Reaction ◽  
Sarbanes Oxley ◽  
Before And After ◽  
The Board Of Directors ◽  
Outside Director

This paper examines the stock market reaction to the appointment of outside directors to the board both before and after the passage of the Sarbanes Oxley Act in 2002. We also examine whether the abnormal returns following outside director appointments are related to audit committee appointments, and whether the outsider has financial expertise. Results show that the market response to the announcement of an appointment of an outsider to the board of directors is mixed, and abnormal returns are not significantly different after the passage of the Sarbanes-Oxley Act compared to those announcements before the Act. Also, we find that the market reaction pre- Sarbanes Oxley is higher when the outsider is expanding the board, lower in cases of CEO/chairman duality, and lower if the outsider is appointed to the audit committee. Post- Sarbanes Oxley CEO/chairman duality has a positive impact on the abnormal returns.

Performance of IPOs of Indian Companies Backed by Private Equity

2019 ◽  
Vol 23 (4) ◽  
pp. 397-409
Author(s):  
Till Drebinger ◽  
Shailendra Kumar Rai ◽  
Heiko Hinrichs
Keyword(s):  
Initial Public Offerings ◽  
Private Equity ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Public Offerings ◽  
Ipo Performance ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Short Run ◽  
The Impact

We examine 616 Indian initial public offerings (IPOs), including 116 IPOs backed by private equity (PE), between 2000 and 2016, to test whether PE-backed IPOs perform better than non-PE-backed IPOs in the short run as well as in the long run in terms of cumulative abnormal returns (CARs). We also examine the impact of the PE firm nationality on post-IPO performance. Consistent with the existing literature, we find underperformance for all IPOs, on an average, within 1 year. However, PE-backed IPOs have lower degree of underperformance than non-PE-backed IPOs. We also find that size, liquidity and leverage have a positive impact on the post-IPO performance after the financial crisis, whereas issue amount and capital issue year are negatively correlated to CARs before and during the crisis. We also find significant effects of PE firm nationality on CAR development. IPOs backed by India-dedicated PE firms perform best, while those backed by foreign PE firms perform worst and even underperform non-PE-backed IPOs. IPOs by foreign PE firms perform better if they co-invest with India-dedicated PE firms.

scholarly journals SUSTAINABILITY BONDS. AN INTERNATIONAL EVENT STUDY

2021 ◽  
Vol 22 (6) ◽  
pp. 1551-1576
Author(s):  
Mihaela Mocanu ◽  
Laura-Gabriela Constantin ◽  
Bogdan Cernat-Gruici
Keyword(s):  
Stock Returns ◽  
Event Study ◽  
Market Reaction ◽  
Positive Impact ◽  
Abnormal Returns ◽  
International Capital ◽  
Bond Issue ◽  
Return On Assets ◽  
Stock Market Reaction ◽  
International Event

Sustainability bonds enable capital-raising and investment for those projects that have both a positive impact on the environment and a positive social outcome. This study examines the stock market reaction to the announcement of sustainability bonds issuance. The present research is designed as follows: first, an event study that examines the market reaction and second, a highlight of drivers influencing this market reaction via a linear regression with cluster-robust standard errors. Overall, small and negative sample-wide reactions to sustainability bond issue announcements were found. Additionally, the study finds significant negative abnormal returns before the publication in June 2018 of The Sustainability Bond Guidelines by the International Capital Market Association. Specifically, the size of the bond issue, whether the bond is callable or not, the announcement of the issue as a single event in a day, the company’s Return on Assets, the firm’s social disclosure score, and the issuance of the bond prior or after June 2018 are statistically significant factors that influence the stock returns of issuers.

scholarly journals Reaction of Stock Prices to Dividend Announcements and Market Efficiency in Pakistan

2010 ◽  
Vol 15 (1) ◽  
pp. 103-125 ◽  
Author(s):  
Muhammad Akbar ◽  
Humayun Habib Baig
Keyword(s):  
Market Efficiency ◽  
Stock Prices ◽  
Stock Exchange ◽  
Statistical Significance ◽  
Abnormal Returns ◽  
Market Model ◽  
Rank Test ◽  
Dividend Announcements ◽  
Signed Rank Test ◽  
Stock Dividend

This study tests the semi-strong form of market efficiency by investigating the reaction of stock prices to dividend announcements. It analyzes cash, stock, and simultaneous cash and stock dividend announcements of 79 companies listed on the Karachi Stock Exchange from July 2004 to June 2007. Abnormal returns from the market model are evaluated for statistical significance using the t-test and Wilcoxon Signed Rank Test. The findings suggest negligible abnormal returns for cash dividend announcements. However, the average abnormal and cumulative average abnormal returns for stock and simultaneous cash and stock dividend announcements are mostly positive and statistically significant.

Divestiture and Its Market Reaction in a Consolidating Industry: The Global Brewing Industry

2021 ◽  
pp. 1-21
Author(s):  
Ludwig Erl ◽  
Florian Kiesel
Keyword(s):  
Mergers And Acquisitions ◽  
Capital Market ◽  
Market Reaction ◽  
Market Performance ◽  
Abnormal Returns ◽  
Brewing Industry ◽  
Efficiency Gains ◽  
Market Values ◽  
Jel Classifications ◽  
The Capital Market

Abstract This study provides a perspective on the market performance of divestitures in the global brewing industry. In 2018, the five largest players accounted for 60% of the global beer volume. We analyze to what extent the capital market values divestitures in an industry where players usually seek efficiency gains and growth through mergers and acquisitions. Based on a sample of 61 divestiture intent announcements in the period from 1999–2018, this study shows that publicly listed brewing groups experience significant positive abnormal returns of about 1.4%. We measure the influential effect of success determinants concerning the underlying industry, the divested business, the divestiture structure, and the divestor itself. (JEL Classifications: G14, G34, L25, Q14)

Fish Exports and Economic Growth: The Pakistan’s Experience

2019 ◽  
Vol 20 (2) ◽  
pp. 279-296 ◽  
Author(s):  
Syed Tehseen Jawaid ◽  
Mohammad Haris Siddiqui ◽  
Zeeshan Atiq ◽  
Usman Azhar
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Positive Impact ◽  
Impulse Response Function ◽  
Policy Implications ◽  
Sensitivity Analyses ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This study attempts to explore first time ever the relationship between fish exports and economic growth of Pakistan by employing annual time series data for the period 1974–2013. Autoregressive distributed lag and Johansen and Juselius cointegration results confirm the existence of a positive long-run relationship among the variables. Further, the error correction model reveals that no immediate or short-run relationship exists between fish exports and economic growth. Different sensitivity analyses indicate that initial results are robust. Rolling window analysis has been applied to identify the yearly behaviour of fish exports, and it remains negative from 1979 to 1982, 1984 to 1988, 1993 to 1999, 2004 and from 2010 to 2013, and it shows positive impact from 1989 to 1992, 2000 to 2003 and from 2005 to 2009. Furthermore, the variance decomposition method and impulse response function suggest the bidirectional causal relationship between fish exports and economic growth. The findings are beneficial for policymakers in the area of export planning. This study also provides some policy implications in the final section.

The Value of the Tax Deferral Option

2020 ◽  
pp. 0148558X2098021
Author(s):  
Nan-Ting Kuo ◽  
Cheng-Few Lee
Keyword(s):  
Stock Price ◽  
Price Change ◽  
Tax Rates ◽  
Trading Volumes ◽  
Tax Savings ◽  
Stock Dividends ◽  
Stock Dividend

This study explores the value of the tax deferral option. By examining ex-day stock-price-change ratios for taxable stock dividends in Taiwan, we find that the tax deferral option is valuable to investors. For a $1 taxable stock dividend, the tax deferral option produces 33.9 ¢ in tax savings, which suggests a tax deferral parameter of 11.3%. We also find that stocks with the tax deferral option have higher trading volumes around ex-days than those without this option, and that higher investor-level tax rates lead to higher value of the tax deferral option. We contribute to the literature by cleanly determining the value of the tax deferral option; our result is not confounded by the restart option.

Marriage as a Mechanism of Internalizing Externalities: A Case of Smoking

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Jane J. You
Keyword(s):  
Positive Impact ◽  
Panel Study ◽  
Legal Institution ◽  
Income Dynamics ◽  
Negative Externalities ◽  
Long Run ◽  
Married Individuals

Abstract With the view of marriage as a legal institution to internalize externalities, I examine the effect of marriage on smoking. From analyzing the data of Panel Study of Income Dynamics, I found that unmarried individuals are more likely to smoke by 4.9% point than married individuals with stronger impact on females. The long-run impact of marriage also shows that the unmarried individuals smoke more than married individuals but some of its positive impact diminishes within two years. These results on the whole imply that marriage internalizes the negative externalities of smoking and thus leads smokers to reduce smoking.

scholarly journals Regional trade and food security challenges: The case of SAARC countries

2020 ◽  
Vol 66 (No. 7) ◽  
pp. 335-344
Author(s):  
Muhammad Waqas Khalid ◽  
Ashar Sultan Kayani ◽  
Jamal Mohammed Alotaibi ◽  
Muhammad Muddassir ◽  
Bader Alhafi Alotaibi ◽  
...  
Keyword(s):  
Food Security ◽  
Regional Cooperation ◽  
Negative Impact ◽  
Positive Impact ◽  
Regional Trade ◽  
Policy Makers ◽  
Long Run ◽  
Security Challenges ◽  
Trading Partners ◽  
Trade Partners

Higher consumption and increased import requirements for the South Asian Association for Regional Cooperation (SAARC) region can be catered through neighboring trade partners if resources are optimally utilized. The purpose of this research is to analyze the connection between regional trade of SAARC countries and the food security challenges faced by the region. The study uses data from 1990–2018 for Pakistan, India, Sri Lanka, and Bangladesh to econometrically analyze the determinants of the volume of food trade. The results show that the gross domestic product of importing or exporting countries and foreign direct investment (FDI) have positive impact on regional trade. The bilateral exchange rate between trading partners has a negative impact on the trade volume. The results also showed the absence of a long-run relationship between volume of trade and food security using Johansen’s cointegration test. Our analysis suggests that policy makers should focus on the means for creating favorable environment in Pakistan and India to not only meet the increasing global demands for food but also increasing their competitiveness for high-quality and low-quality priced products in major exports markets.

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