Relevance of Dividend Announcement in Investment Decision of An Individual Investor

Abstract

The investment decision is influenced by many factors. One such factor is return. The shareholders may get return in the form dividend and capital appreciation. The purpose of this study is to find out the effect of dividend announcement on share price. The study is carried out for three years from 2009to2011. The Independent sample T-test is employed to compare price before and after dividend announcement. The correlation between share price and sensex is also analysed to find out whether change price is due to change in index. The change in price is also compared with amount of dividend. The study result shows that there is a rise price after result hut that rise in price is mainly due to market conditions rather than dividend. The increase or decrease in share price is not reflecting the amount of dividend. The CAR is positive in the long run after dividend announcement.