SAMVAD: International Journal of Management

Open Access Open Access  Restricted Access Subscription Access

Study of Behaviour of Price, Return, Volume and Trading Activity around the Stock Dividends (Information Content in Stock Dividend)


Affiliations
1 Department of Finance and Accounting, FLAME University, Pune, India
 

Corporate actions can signal good news to the investor or can be fictitious corporate action in order to attract attention of investors, analyst and media. Stock dividends do have a signalling impact and generally it is perceived as a positive signal. This study focuses on behaviour of price, return, volume and trading activity around the stock dividends, impact of stock dividend size and BSE categorization on the variables. Findings are suggestive that stock dividends announcement has no impact on Price and trades. Volume of shares increases before the event date and there is a decrease immediately after the event day. Returns on shares are statistically different pre and post event and returns are higher in the pre-stock dividend period. There is a permanent increase in shareholders wealth (share price) and abnormal returns on the event day is around 3% and majority of the companies reported positive abnormal return.

Keywords

Abnormal Returns, Bonus Shares, BSE Categorization, Stock Dividend.
User
Notifications
Font Size

  • Balachandran, B., Faff, R., & Tanner, S. (2005). A further examination of the price and volatility impact of stock dividends at ex-dates. Australian Economic Papers , 248-268.

  • Banker, R., Das, S., & Datar, s. (1993). Complementarity of Prior Accounting Information: The Case of Stock Dividend Announcements. The Accounting Review, 68(1), 28-47.

  • Barker, A. (1959). Price Changes of Stock-Dividend Shares at Ex-Dividend Dates. The Journal of Finance, 14(3), 373-378.

  • BSE. (2014, October 05). Retrieved from bseindia: http:// www.bseindia.com

  • Chottiner, S., & Young, A. (1971). A test of the AICPA dif- erentiation between tock dividends and stock split. Journal of accounting research, 367-374.

  • Copeland, T. (1979). Liquidity Changes Following Stock Splits. The Journal of Finance, 114-141.

  • Doran, D., & Nachtmann, R. (1988). The Association of Stock Distribution Announcements and Earnings Performance. Journal of Accounting, 3(2), 113-132.

  • Dravid, A. (1987). A Note on the Behavior of Stock Returns around Ex-Dates of Stock Distributions. The Journal of Finance, 163-168.

  • Foster, T.W., & Vickrey, D. (1978). The Information Content of Stock Dividend Announcements. The Accounting Review, 53(2), 360-370.

  • Garcia de Andoain, C., & Bacon, F.W. (2009). The impact of stock split announcements on stock prices: A test of market efficiency. Proceedings of ASBBS (pp. 1-14). Las Vegas: Proceedings of ASBBS.

  • Grinblatt, M., Masulis, R., & Titman, s. (1984). The Valuation Effects Of Stock Splits And Stock Dividends. Journal of Financial Economics, 13(4), 461-490.

  • Ikenberry, D., Rankine, G., & Stice, E. K. (1996). What Do Stock Splits Really Signal? The Journal of Financial and Quantitative Analysis , 357-375.

  • Lakonishok, J., & Lev, B. (1987). Stock Splits and Stock Dividends: Why, Who, and When. The Journal of Finance, 913-932.

  • Lamoureux, C.G., & Percy, P. (1987). The Market Reaction to Stock Splits. The Journal of Finance, 1347-1370.

  • Mehta, C., Jain, P.K., & Yadav, S. (2009). Rationale Of Stock Dividends/Bonus Shares:An Empirical Study Of Private Sector Enterprises In India. Journal of Financial Management and Analysis, 28-39.

  • Millar, J., & Fielitz, B. (1973). Stock split and stock Dividend decision. Financial Management, 35-45.

  • Miller, J., & Fielitz, B. (1973). Stock-Split and Stock-Dividend Decisions. Financial Management, 2(4), 35-45.

  • Mishra, A. (2007). The Market Reaction To Stock Splits. International Journal of Theoretical and Applied Finance, 251-271.

  • Ohlson, J.A., & Penman, S. (1985). Volatility increases sub- sequest to stock splits. An empirical aberration. Journal of financial Economics, 251-266.

  • SEBI. (2009, 02 24). SEBI. Retrieved from www.sebi.gov.in/ circulars/2009/dip342009.pdf

  • Sloan, R. (1987). Bonus Issue, share split and Ex-Day share price behaviour: Australian evidence. Australian journal of management, 12(2), 277-292.

  • Woolridge, R. (1983). Ex-Date Stock Price Adjustment to Stock Dividends: A Note. The Journal of Finance, 38(1), 247-255.


Abstract Views: 338

PDF Views: 123




  • Study of Behaviour of Price, Return, Volume and Trading Activity around the Stock Dividends (Information Content in Stock Dividend)

Abstract Views: 338  |  PDF Views: 123

Authors

Ruzbeh J. Bodhanwala
Department of Finance and Accounting, FLAME University, Pune, India

Abstract


Corporate actions can signal good news to the investor or can be fictitious corporate action in order to attract attention of investors, analyst and media. Stock dividends do have a signalling impact and generally it is perceived as a positive signal. This study focuses on behaviour of price, return, volume and trading activity around the stock dividends, impact of stock dividend size and BSE categorization on the variables. Findings are suggestive that stock dividends announcement has no impact on Price and trades. Volume of shares increases before the event date and there is a decrease immediately after the event day. Returns on shares are statistically different pre and post event and returns are higher in the pre-stock dividend period. There is a permanent increase in shareholders wealth (share price) and abnormal returns on the event day is around 3% and majority of the companies reported positive abnormal return.

Keywords


Abnormal Returns, Bonus Shares, BSE Categorization, Stock Dividend.

References