Published Online:January 2026
Product Name:The IUP Journal of Applied Finance
Product Type:Article
Product Code:IJAF030126
DOI:10.71329/IUPJAF/2025.32.1.57-67
Author Name:Santosh Irappa Gongadi and A S Shiralashetti
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:57-67
This study analyzes the effect of dividend announcements on stock returns of 20 financial companies listed on the Nifty100 index, examining 82 announcements from 2019 to 2023 using event study methodology. An estimation window of 60 days and an event window of 21 days are considered. The expected returns are calculated using the market model, and the significance of abnormal returns is tested using the t-test. Furthermore, to gain a detailed understanding of the event’s impact, the event window is divided into various sub-windows. The findings reveal that dividend announcements positively impact stock returns, resulting in the acceptance of the hypotheses formulated at 5% and 10% levels of significance, with significant effects noted on pre-announcement days. The market appears to anticipate these announcements, providing shareholders an opportunity for abnormal returns.
The dividend decision is regarded as one of the major decisions in corporate finance. The dividend decision affects the firm’s growth rate, credit standing, share prices, and ultimately the firm’s overall value. The dividend is the portion of the profit after tax that is distributed to the shareholders of the company.