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Effect of dividend announcements on stock price fluctuations for Milanka price index listed companies in Colombo stock exchange

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dc.contributor.advisor Samarasinghe, ATLK Perera, HDHK 2014-07-28T16:23:17Z 2014-07-28T16:23:17Z 2014-07-28
dc.description.abstract At the end of thirty years of a civil war, Colombo Stock Exchange (CSE) has become one of the best performing stock exchanges by the end of first half of 2010. Therefore, it would be interesting for everyone who interest in share trading to identify the investor behavior of the CSE towards the market events. Dividend announcements are associated with past and present financial performance of firms. Dividend payments provide cash flow to the share holders but it reduces firm's resources for investment. There is an evidence of capital market that the managers used dividend announcements as a signaling device and shareholders responded to this signal accordingly. Hence this study investigates how the stock price reacts to the dividend announcements of Milanka Price listed companies in CSE for the period of 2005-2009. Sample of the study consist of 105 dividend announcements which represent 25 industrial and commercial companies listed in Milanka Price Index of CSE. For deeper understanding of the study, sample was categorized into three categories: positive, negative and neutral according to the Aharony and Swary (1980) the naive 'no change' expectations model. There are 51 positive dividend announcements, 24 negative announcements, 30 neutral dividend announcements. Event study methodology developed by Asquith and Mullins (1983) used to analyze the average abnormal returns and cumulative abnormal returns around the dividend announcement day within 41 event window period. Expected return on share / on day t can be calculated using two well accepted models Market-Adjusted model and raw returns model. Results gain from the study shows that market reacts positively to positive dividend announcements with the significant reaction on the announcement day while market does not react significantly to other two categories on the announcement day. However there are some significant cumulative abnormal returns exist on pre announcement period for all three categories in raw returns model. In summary, there are positive market reaction from investors to both positive and neutral dividend announcements and negative market reaction for the negative dividend announcements. The results of the all three sample support the informational content hypothesis but the magnitude is change. Therefore Sri Lankan results are difference from developed market results. en_US
dc.language.iso en en_US
dc.title Effect of dividend announcements on stock price fluctuations for Milanka price index listed companies in Colombo stock exchange en_US
dc.type Thesis-Abstract en_US
dc.identifier.faculty Engineering en_US Master of Business Administration in Management of Technology en_US
dc.identifier.department Management of Technology en_US 2010-12
dc.identifier.accno 100813 en_US

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