POLICY AND BEHAVIOUI; ý AND SECURITY OF DIVIDENDS
PRICE REACTIONN MARKET
TO THE ANNOUNCEMENT
IN AN EMERGING
A Study of Companies Listed on the Dhaka Stock Exchange
A. Sabur Mollah B. Com (Honours), M. Com (Dhaka)
Submitted in accordance with the requirements for the degree of Doctor of Philosophy Leeds University Business School University of Leeds September 2001
The candidate confirms the work submitted is his own and that appropriate has been given where reference has been made to the work of others. credit
POLICY AND BEHAVIOUIý,
PRICE REACTION NLARKET
TO THE ANNOUNCEMENT
IN AN EMERGING
A Study of Companies Listed on the Dhaka Stock Exchange ABSTRACT 'The harder we look at the dividend picture, the more it seems like a puzzle, i0th don'tfit together'(Black 1976, p. 5). A number of researchers provide pieces thatjust insights, theoretical as well as empirical, into the dividend policy puzzle. However, the issue as to why firms pay dividends is as yet unresolved. Several rationales for the dividend policy propose in the literature, but there is no unanimity among corporate Everyone, however, agrees that the issue is important, as dividend researchers. is one of the most commonly observed phenomenon in corporations worldpayment wide. Several studies have been conducted on dividend policy and behaviour, and
to the announcement dividends but a very few studies have of security price reaction been conductedon emerging markets, therefore, a quite lot of issuesof the emerging Therefore, the existing published evidence is of limited markets are still unresolved. in identifying the appropriate dividend policy and behaviour, and security relevance to the announcement dividends in an emergingmarket. of price reaction The objectives of this thesis are threefold: firstly, to identify the detenninants of dividend policy, secondly, to investigate the dividend behaviour, and thirdly, to identify the security price reaction to the announcement of dividends in an emerging
The identify leverage, insider
the major determinants of dividend policy. However, the collateralizable assets as document that dividend decision is primarily governed by cash flow empirical results for measuring the capacity of the companies to pay dividends and dividends paid in the i. e., lagged dividends. The empirical results also identify Brittain's previous years, (1966) partial adjusted model as the best-fit dividend behavioural model. Furthermore,
in the market, so, information used to be adjusted with the share as insiders trade dividend announcementdoes not carry and consequently prices before announcement information to the market. Therefore, the empirical results document no any new impact of dividend announcements the security prices of an emerging on significant Finally, the empirical results identify that the emerging markets are inefficient. market.
ACKNOVMEDGEMENTS Praise be upon Almighty ALLAH who has created me and given me the ability to complete this thesis in time. I am especially indebted to my research supervisor, Professor Kevin Keasey, for his invaluable guidance, support and encouragement throughout the preparation of this thesis. I would like to express my thanks and to my ex-supervisors, Professor Robert Watson and Dr. Helen Short, for appreciation their invaluable guidance and comment on the earlier draft of this thesis.
Thanks are particularly
to my parents whose support and continuous
to the successof my life. encouragement were crucial
My greatest thanks are for my dear wife, Asma, whose sacrifices allowed me to thesis. I am especially thankful to my dearest daughter, Parisa, who is an complete my abundant source of my encouragement.
Thanks are particularly to my ex-teachers of the Department of Finance and Banking, University of...
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