The Role of Firm-Specific Variables in Explaining Heterogeneous Stock Market Reactions to Dividend Announcements

Mohib Ullah, Attaullah Shah


The finance literature reports mixed results about the stock market reaction to dividend announcements. We try to explore that the heterogeneous stock market reaction to dividend announcements might be attributed to a number of firm-specific financial and non-financial factors. In this vein, we investigate the role of family ownership, firm size, leverage, dividend yield, market-to-book ratio, and firm growth in explaining the stock market reaction to dividend announcements. We use a sample of 206 dividend announcements of 136 firms listed at the Karachi Stock Exchange over the period of 2008 to 2012. Results of both the univariate and multiple regression analysis show that family ownership, firm size, and leverage negatively influence the stock market reaction to dividend announcements while dividend yield positively influences the stock market reaction to dividend announcements. 


Dividend announcements, heterogeneous market response, KSE, signalling theories, abnormal returns

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This work is licensed under a Creative Commons Attribution 4.0 International License.