AN EVENT STUDY ANALYSIS TO EVALUATE THE EFFICIENCY OF STOCK MARKET WITH RESPECT TO DIVIDEND ANNOUNCEMENTS IN PUBLIC (SBI Bank & PNB Bank) AND PRIVATE (HDFC Bank & ICICI Bank) BANKING COMPANIES
Journal Title: International Journal of Research in Social Sciences - Year 2011, Vol 1, Issue 1
Abstract
_________________________________________________________ A Quarterly Double-Blind Peer Reviewed Refereed Open Access International e-Journal - Included in the International Serial Directories International Journal of Research in Social Sciences http://www.ijmra.us 136 August 2011 The Efficient Market Hypothesis (EMH) provides that security prices reflect all available information.T he market price of a security is its price on the Stock Exchange‟ s trading market. The speed with which the market reacts to new knowledge about the company is a measure of the efficiency of its pricing process. This process is likely to be enhanced if market participants have unimpeded and costless access to all relevant information about the company‟ s prospects and if high transaction costs do not constitute barriers to trading on the stock exchange. The purpose of the study 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 the EMH conclusions as far as the National Stock Exchange was concerned The event study methodology was used to achieve the research objective. Additionally T- Test was employed in testing the null hypothesis. The major finding was that the NSE was a semi-strong efficient market resulting in the conclusion that the time of announcement can be used for the making easy money but is very rare to find that on which date company will announce the dividend and if investor are able to predict this than in that case easy money can be made with the help of that information.
Authors and Affiliations
Vinod Kumar, Shelly Singhal and Gaurav Kamboj
Keywords
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