Abstract
This study aims to test the effect of dividend announcement on stock prices on banking shareholding companies, and investigating the information content of this announcement on either stock prices and trading volumes. it is also aims to investigate the ability of investors to earn abnormal return by using these information.The behaviour of stock prices is studied on the basis of monthly or weekly movements. On this paper an attempt was made to analyze the daily stock prices of banking shareholding companies listed in Amman bourse using CAPM model in order to estimate the normal return and the percentage change of daily stock prices in order to estimate the actual return.The hypothesizes of the study were examined by using parametric tests as one-sample test and paired sample to test. it was found that there was no information content to these dividends' announcements on stock prices and investors couldn’t neither use information to beat the market nor earning abnormal return .This study can be a source of help to market makers to improve either way of timing their decision to buy and sell stocks or the way of analyzing dividend announcement content . and it is also a source of help to potential and current investors to improve their understanding and reading of these announcements . Keywords: return(excess return),normal: dividend announcements ,stock prices, abnormal return ,CAPM,under reaction,over reaction DOI : 10.7176/RJFA/10-18-03 Publication date :September 30 th 2019
Highlights
1.1Introduction Dividend announcements is considered as a key instrument for information used to make financial decisions by market makers and investment institutions, creditors and investors because it has a multi information content for those groups
Dividend announcements provide key information for current and potential investors,creditors and many others to make rational decisions related to their portfolios ; annual dividend announcements contains a lot of information which may change market makers strategies related to a specified stock or portfolio and as a result may affect trading volume
As dividend announcements are public information and available for all investors, this study is an attempt to find the effect of these announcements on stock prices and the ability to earn abnormal return. this mean it is is a testing efficiency of Amman bourse at semi strong
Summary
1.1Introduction Dividend announcements is considered as a key instrument for information used to make financial decisions by market makers and investment institutions , creditors and investors because it has a multi information content for those groups. As dividend announcements are public information and available for all investors , this study is an attempt to find the effect of these announcements on stock prices and the ability to earn abnormal return (excess return).
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