The impact of dividend announcements on share price and trading volume: Empirical evidence from the Gulf Cooperation Council (GCC) countries
ISSN: 0144-3585
Article publication date: 14 May 2018
Issue publication date: 14 May 2018
Abstract
Purpose
The purpose of this paper is to investigate the stock market response to dividend announcements in high growth emerging markets of Gulf countries.
Design/methodology/approach
The sample includes 1,092 dividend announcements from 299 listed firms over the period 2010-2015.
Findings
In the environment where there is an absence of capital gain and income tax, the authors find some evidence for the stock price reaction that partly supports the signaling hypothesis. The findings show that the Gulf Cooperation Council (GCC) market is inefficient because of the leakage information before the announcement in bad news, and the delay of share price adjustment in good news. In addition, the authors report significant trading volume (TV) reaction in all the three announcements clusters, where dividends increase, decrease, and are constant, lending support to the hypothesis that the dividend change announcements have an impact on the TV response due to different investors’ preferences.
Originality/value
This is the first empirical paper on market reaction in share price and TV around dividend announcement using data for the majority of GCC countries.
Keywords
Citation
Felimban, R., Floros, C. and Nguyen, A.-N. (2018), "The impact of dividend announcements on share price and trading volume: Empirical evidence from the Gulf Cooperation Council (GCC) countries", Journal of Economic Studies, Vol. 45 No. 2, pp. 210-230. https://doi.org/10.1108/JES-03-2017-0069
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited