2025, Vol. 8, Issue 2

author(s)
Karthikeyan P, Anish Kumar KP and Manjula KA

abstract
Financial markets play an important role in connecting the savers who have surplus funds with seekers of funds. Financial markets are very crucial in raising capital and distributing it efficiently and there is direct positive relationship between financial markets and economic development. The prices of shares are not stable, these prices fluctuate continuously due to changes in demand and supply for securities in the market. These fluctuations are influenced by a combination of macroeconomic conditions, company specific factors and behavioural factors. Information plays a central role in this volatility in share prices. As new information arrives, investors respond by altering their expectations about the firm which is reflected in the share prices of that firm. Corporate disclosures such as financial results announcements, dividend declarations, and management guidance are some of the sources for key information signals for market participants. Dividend announcements made by companies are an important source of information for investors. The impact of this dividend announcements have been studied by many researcher, but still there are conflicting finding regarding this in Indian market. This study examines the impact of cash dividend decision on share prices using event study methodology. It is found that cash dividend decisions do have an impact on share prices through abnormal returns on the event date.