The impact of the disclosure of dividends announsement policy on share prices Case study : Dubai stock excange during 2011

Abstract

The aim of this study is to measure the impact of the disclosure of the dividend policy on the share prices for the listed companies in Dubai Financial Market as an event, which sends signals on the status of the company and its future prospects, hence leading to change their stock prices. In order to achieve this objective, we used the event study methodology as we are dealing with an applied study, which is looking for the relationship between stock prices and financial events. We take five days before and after the event for a limited sample of 22 companies announce dividends during 2011.

The results reveal that the size of the abnormal average return for the periods after the announcement was too small and statistically insignificant. This indicates that the market is unable to absorb new information. Furthermore, the results show the non-existence of the impact of the dividend announcement on the shares prices of the listed companies in Dubai stock exchange market. Thus, in this study the dividend announcement as a signal to influence the share prices did not achieved.