The impact of dividend announcement on share price behaviour
Loading...
Date
2008-10-21
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The Efficient Market Hypothesis (EMH) provides that security prices reflect all information. However, despite dividend announcement made in 2005, three companies selected for study performed badly on Ghana Stock Exchange (GSE). The problem of the study was therefore to establish whether the GSE did not recognize company-specific information in pricing shares. The objective was to ascertain whether there was an instantaneous reaction of the companies’ share prices to dividend announcement in order to provide the basis for confirming or dispelling EMH conclusions.
The event study methodology was used to achieve the research objective. Additionally, the Wilcoxon Matched-Pair Sign-Ranked Test was employed in testing the null hypothesis that dividend announcement did not have any significant impact on share price behaviour. The major finding was that GSE was not semi-strong efficient resulting in the conclusion that the GSE must address itself to three forms of efficiency – operational efficiency, allocation efficiency, pricing efficiency. Various recommendations were made to enhance the efficiency of the GSE.
Description
A dissertation submitted to the Department of Accounting and Finance,
School of Business in partial fulfillment of the requirement for the award of
Executive Master of Business Administration
(Banking and Finance), 2008