Effect of Dividend and Earnings Announcements on Share Prices: Nepalese Evidence

International Journal of Economics and Management Studies

© 2016 by SSRG - IJEMS Journal

Volume 3 Issue 7

Year of Publication : 2016

Authors : Jeetendra Dangol

10.14445/23939125/IJEMS-V3I5P105

How to Cite?

Jeetendra Dangol, "Effect of Dividend and Earnings Announcements on Share Prices: Nepalese Evidence," SSRG International Journal of Economics and Management Studies, vol. 3,  no. 7, pp. 35-39, 2016. Crossref, https://doi.org/10.14445/23939125/IJEMS-V3I5P105

Abstract:

 The paper investigates the effect of dividend and earnings announcements on share prices in Nepal between 2000 and 2011. The study finds, dividend increased (decreased) announcement effect positively (negatively) during the dividend announcement period. Similarly, the announcement of Dividend increased-Earnings increased (Dividend decreased-Earnings decreased) shows positive (negative) influence on the share prices. The study also finds the significant effect of constant dividend announcement on share price. The reason behind this phenomenon could be that the investors perceive ‘no change in the dividend’ positively. This result suggests that the both dividend increase and decrease convey useful information to the market. The results accept the dividend signalling hypothesis but reject the semi-strong form of market efficiency.

Keywords:

Dividend, Earnings, Market efficiency, Signalling effect.

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