Acceso usuarios
Prema Krishnan, M. N. Periasamy
Purpose: The purpose of this study is to examine the efficiency of the Indian stock market of the Nifty IT index over the dividend announcement for five years from 2016 to 2020.
Theoretical framework: A reward procured by the shareholders on their equities is, of course, the dividend. A leading area of concern is the dividend announcement. According to the theory of efficient markets, stock prices accurately reflect all available information. This demonstrates that the prices are correct and fair. The market should therefore respond immediately to an event in this instance the dividend announcement. Therefore, depending on publicly available information will not provide investors with the possibility to consistently generate extraordinary returns.
Design/ methodology/ approach: The study attempts to validate the event study approach while investigating the semi-strong form of efficiency. Daily share prices of five companies out of ten of the Nifty IT index were observed to test the Efficient Market Hypothesis. 31 days event window has been employed to calculate the abnormal returns of the selected sample around dividend issue announcements also t-test was applied to assess the level of significance.
Findings: The study found that the stock market was efficient in its semi strong form and the investors could not make excess returns over the dividend announcement of the Nifty IT index.
Research, Practical & social implications: This study eliminates the possibility for investors to beat the average market returns. It is significant since it affects stock market investment choices.
Originality/ Values: The majority of studies are only able to analyse the overall average abnormal return and cumulative average abnormal return of chosen companies; it is difficult to locate studies that focus on the abnormal return for each individual company. The t test for each company-wise abnormal returns, overall average abnormal returns, and cumulative average abnormal returns were acquired and tested at the 5% level of significance in order to determine the significance.
