SHARE PRICE BEHAVIOUR AROUND BUY BACK AND DIVIDEND

ANNOUNCEMENTS IN INDIA

Prepared by:Dr. P. Thirumalvalavan – Reader, Bharathiar School of Management and EntrepreneurDevelopment, Bharathiar UniversityK. Sunitha – Research Scholar, Bharathiar School of Management and EntrepreneurDevelopment, Bharathiar University

ABSTRACT

Over the past few years, many firms have announced significant number of stock

repurchases. The overwhelming reason given for stock repurchase announcements has been

to reverse a trend of declining stock prices. Share buy backs have become an important area

in financial research considering its strong implications for corporate policy. Indian

companies have been permitted to buy back shares after the provisions of the Companies Act

1956 were suitably amended in 1999. Several studies have provided conclusive proof of

signaling effect of stock repurchase and dividends announcements. This paper investigates

and tests the following: 1) Signaling effect of a share buy - back and dividend announcements

2) The market reaction and share price behaviour to announcements of stock repurchases

and dividends 3) Abnormal Returns across various repurchase levels. The analysis uses data

of 22 firms in the BSE 500 index, which has announced stock repurchase option and

dividends during the period 2002 –2004. An examination of share price behaviour around

stock repurchases and dividends prove the signaling effect of these announcements. Stock

repurchase programs recorded a high cumulative abnormal return of 3.2 percent within two

days of the event whereas dividend announcement recorded a high cumulative abnormal

return of 2.1 percent within one day of the event. There is no significant difference in

abnormal returns as result of various repurchase levels. These results imply the strong

signaling power of stock repurchases announcements and that the market reacts more

favourably to repurchases compared to dividend announcements.

1. INTRODUCTION

The following two empirical facts are well established in the corporate finance literature on payout policy.

First, firms distribute cash to their shareholders using both alternative mechanisms: cash dividends and stock

repurchases; despite that dividend are taxed. This empirical evidence has been referred as the dividend

puzzle 1.Open market stock repurchases and dividend initiation announcements are associated with positive

abnormal stock return. The market reaction to both payout methods is of similar magnitude2. Stock repurchase

refers to the reversal of equity offerings. The issue of stock repurchase has been the focus of much theoretical

and practical research and is often considered as one of the classic methods to raise a company's stock price. By

reducing the number of shares outstanding, the interaction of demand and supply is expected to cause the stock

price to float upward. Further, the surge in the number of stock repurchase announcements over the last decade

has raised the question of whether repurchase transactions offer firms long-term benefits.

The company may buy-back shares from the existing shareholders on a proportionate basis either

through tender offer; or from the open market either by inviting tenders or by the book building process; or odd-

lot shares; or the shares issued to employees pursuant to a scheme of stock option or sweat equity. In USA,

companies are allowed to do treasury operations in their stock whereas Indian companies have to necessarily

cancel their shares pursuant to their buyback programme. As a part of laid out procedure the management is

required to inform the shareholders the necessity for the share buyback, basis of the offer price, sources of

funds, and the management discussion on the likely impact of the buyback on the company in the offer

document. Most of the Indian companies in their offer document have claimed that the share buyback

programme is expected to contribute to the overall enhancement of the shareholder value. However, no

supportive analysis has been provided in the discussion.

The paper investigates market reaction to announcements of stock repurchases and dividends and

choice between the two-payout methods. The analysis uses data on firms listed in the BSE 500 index in the

sample period of 2002 to 2004.

2. REVIEW OF LITERATURE:

Jensen (1986) states that firms repurchase stocks to distribute excess cash flow. There is a positive

relationship between stock repurchases and levels of cash flows [see for example, Stephens and Weisbach

(1998); Vermaelen (1981)]. Harris and Ramsay (1995) find that the share buyback activity creates value for the

company and the remaining shareholders.

1 Recent studies of Fama and French (2000) and Grullon and Michaely (2002) show how the pattern of payout

policy has been changing in the last decades.

2 Compare, e.g., Asquith and Mullins (1983) and Ikenberry, Lakonishok, and Vermaelen (1995). The formerpaper reports the initial reaction to dividend initiations of +3.7% and in the later paper the reaction to stockrepurchases is +3.54%.

Bartov, Eli (1998) analysis of 150 firms announcing share repurchase during the period 1986 to 1992

vis-à -vis other firms in the same industries that preferred to increase dividends finds that stock buyback firms

had higher book to market ratio and higher proportion of institutional investors. This highlights ‘ under

valuation’ and ‘ tax advantage’ as the two major motivations of the share repurchase programme.

Vermaelen (1981) and Ikenberry, Lakonishok and Vermaelen (1995) find abnormal returns of

approximately 3% over a two-day announcement period. In addition, Ikenberry, Lakonishok and Vermaelen

(1995) hypothesize that stock repurchases primarily serve as a signaling mechanism and thereby provides new

information. The signaling hypothesis led to an investigation of the long-run performance of companies

announcing stock repurchases. Using a sample of 1,239 open market repurchases announced between 1980 and

1990, they show that investing in companies that announce stock repurchases results in 12.4% abnormal returns

over 4 years. However their examination was done without regard to whether the programs were actually

completed. Firms seem to decide to repurchase when they are undervalued and the market discounts only part of

this information at the announcement. If we assume that stock price is for some reason undervalued before a

repurchase announcement and remains so afterwards then repurchasing can create positive value to shareholders

analogous to that of Porter, Roenfeldt, and Sicherman (1999). They show that undervalued closed end funds

gain in value after repurchasing their shares. It is even if the discount factor stays at the same level after

repurchases 3.

Early work by Comment and Jarrell (1991) investigates the signaling hypothesis as it relates to stock

repurchase announcements. They examine the three main methods of repurchasing stock – tender offers, Dutch

auction, and open market repurchases and conclude that fixed-price tender offers generally signal the most

information to investors and open-market repurchase the least. The signaling hypothesis would also

imply that firms repurchase to gain maximum benefits from repurchasing when their stock price is most

undervalued.

Research also focuses on firm earnings changes surrounding stock repurchases. Nohel and Tarhan

(1998) examine tender share repurchases to differentiate between the information signaling and free cash flow

hypothesis and conclude that the positive investor reaction to repurchases is best explained by the free cash flow

hypothesis.

Essentially, from the financial policy indifference theorem of Miller and Modigliani (1961), in perfect

and complete markets there should be no positive market reaction to any payout announcements, and stock

repurchases and dividends would be interchangeable. In fact, payout policy would not create any value and any

cash distributions to shareholders would be obsolete. Two questions relevant to this paper arise in light of the

Miller and Modigliani’ s (1961) payout policy indifference theorem: What factors create the positive market

3Undervaluation of closed-end funds is clearly visible and measurable.

reaction to payout announcements? What explains the observed cross-sectional differences in the market

reaction? In the corporate finance literature some of the assumptions of perfect and complete markets have been

lifted to explain empirical evidence, which is often at odds with the dividend policy indifference theorem.

In signalling models of Bhattacharya (1979) and Miller and Rock (1985) cash distributions to

shareholders convey positive information about firm’ s future earnings. However, in these settings dividends

and stock repurchases are perfect substitutes. There is mixed empirical evidence of cash disbursements

information signalling. Bartov (1991) find (weak) increase of earnings after open market stock repurchases

announcements, but a more recent study of Grullon and Michaely (2003) does not confirm this result4. The

evidence for dividends announcements varies in similar manner.

This study is one of the work examining the impact of stock repurchase program and dividend

announcements on share price behaviour and their relative signaling power with reference to Indian firms.

3. NEED & SIGNIFICANCE OF THE STUDY

There has been a tremendous growth in the share buyback activity first in US, then the UK, and later in

1990s in Continental European countries (see for example, Stonham, 2002). A large number of Indian

companies have announced their share buyback programmes too. These are to name a few Advani-Oerlikon

Limited, Ashoka Leylands Limited, Blue Star Limited, Finolex Cables Limited, Indian Nippon Electricals

Limited, Indian Resort Hotels Limited, Motor Industries Company Limited, Raymonds Limited, Reliance

Industries Limited, SRF Limited and Siemens Limited. Thus, there is a need to study the significance of this

emerging trend, its signaling effect on share price and its impact on the wealth of the shareholders. It is believed

that the findings of the study will be of immense use to academia and the industry to understand the practice and

develop new theories.

4. HYPOTHESIS

Our objectives are twofold. (1) First, we analyse if the market recognizes any differences between

stock repurchases and dividends and if it reacts more favourably to firms’ announcements of one of the payout

instruments. This leads to the hypothesis:

H1: There is no positive signaling in Share price behaviour around buybacks.

H2: There is no positive signaling in Share price behaviour around dividendannouncement.

H3: There exist no significant difference between the cumulative abnormalreturns of stock repurchases and dividend announcements.

4 The information signaling of tender offer and Dutch auction stock repurchases is documented moreconvincingly (See Vermaelen (1981), Comment and Jarrell (1991), and Lie and McConnell (1998)), but in thispaper the focus is on the most popular form of repurchases, open market repurchases.

2) Secondly, as the market is assumed to be efficient, the expectation is that stock prices should

reflect the level of stock repurchases, given that an abnormal return is evident upon the announcement. This

leads to the fourth hypothesis:

H4: Stock prices in the post announcement period will reflect the level ofstock repurchases.

Alternatively, if the market reaction to the repurchase announcement is in response to a signal of under-

pricing, then stock prices may not adjust to reflect the extent of actual stock repurchases.

To test the hypothesis, market adjusted cumulative abnormal returns (the BSE 500 index was used as

the market reference) was calculated for each stock for a 5-day period, starting on the announcement date. Next,

the average cumulative abnormal returns are calculated and the means of abnormal returns for various level of

repurchase are compared for statistical significance.

5. SAMPLE

The sample consists of stock repurchase announcements obtained from the on line database of Bombay

Stock Exchange between January 2002 and December 2004. (Although several announcements relating to

repurchase of preference shares were recorded in the review period, the scope of this paper is limited to

repurchases of common stock only.) A total of 61 repurchase announcements were identified, found, with the

final sample being reduced to 22. Similarly, a total of 55-dividend announcements were reported, of which 21

were taken in the final sample. The study was limited only to 22 firms because several firms were replaced in

the BSE 500 index between 2002 - 2004, few firms were advised not to proceed on account of non compliance

of Clause 40A, few firms announced the suspension of the repurchase plans, while detailed stock information

was unavailable for a few, others hasn’ t made a dividend announcement, such firms were thus eliminated to

avoid bias. Of the final sample (22), 6 firms (27%) purchased less than 25%, 5 firms (23%) purchased between

26% and 50%, 2 firms (9%) purchased between 51% and 75% and 9 firms (41%) purchased between 76% and

100. (See Table 1 & 2). .

Stock prices and dividend announcements were obtained from BSE database. The Buy Back status

report published by Financial Express provided information of opening and closure date of the repurchase,

percentage of repurchase offered, percentage of repurchase accepted and pre & post number of outstanding

shares. In addition, the data is free of day-of-the-week skew as the announcements were fairly evenly spread

across all five trading days. Table 1 gives the sample breakdown across years.

Table 1 provides description of the sample. The sample consists of announcements of stock

repurchases and dividends of Indian firms over the period of 2002 - 2004. The sampled units are the same for

both stock repurchases and dividend announcements, so as to assess the comparative signaling power of the

event on share price.

Table 1Sample Description

2002 2003 2004 Total

Stock repurchases samplesNumber of announcements 13 7 2 22Dividend announcements samplesNumber of announcements 11 7 2 21

Repurchase level0 - 25% 4 1 1 6

26 - 50% 1 3 1 5

51 - 75% 2 0 0 2

76 - >=100% 6 3 0 9

The sample is divided into quintiles based on the extent of share repurchases. The first quintile includes

firms with a repurchase level less than 25%, second quintile for firms with 26% - 50%, third quintile for firms

with 51% - 75% and the fourth quintile represents firms with 76% - >100% repurchases.

The mean announced size of the repurchase program is approximately 0.25 percent of the firm’ s total

shares outstanding at the announcement date and the median is approximately 0.12 percent of the firm’ s shares

outstanding.

6. METHODOLOGY

Stephens and Weisbach (1998) points out that share repurchases could be neither observed at the time

the transaction occurs or directly measured afterward. They use four methods as proxies for the actual number

of shares repurchased by firms subsequent to the announcement of an open market repurchase programs. The

four methods are; 1) monthly decreases in the firm’ s shares outstanding 2) quarterly decreases in the firm’ s

shares outstanding 3) amount spent reacquiring firm stock using minimum and average quarterly purchase price,

and 4) quarterly increases in the money value of treasury stock divided by minimum and average prices during

the quarter. Empirically, the four methods produced results that were basically similar. This paper uses the

buyback status report published by Financial Express for the firms in the sample.

6.1 Short-term Abnormal Returns

The first step in the analysis of the impact of actual stock repurchase on the level of abnormal returns

requires computing the market adjusted cumulative abnormal returns (CAR) for the sample of 22 firms over a

five-day trading period starting on the announcement date. By examining this shorter interval, the analysis

investigates whether the abnormal returns just after the announcement ultimately impact the subsequent levels

of repurchases. (The announcement date was included since the publication date would be normally a trading

date and investors have the opportunity to respond to such announcements on the same date.)

Standard event-study procedures as used by Comment and Jarrell (1991) and Stephens and Weisbach

(1998) were used to calculate the abnormal returns. The abnormal return in any given period is the market

model residual, which is the difference between the stock’ s actual return and the predicted return based on the

market return for that period. Hence the market adjusted abnormal returns were calculated as:

ARij= RTij- RM------- (1)

Where ARij is the abnormal return for firm j on day i.RTij is the actual return for firm j on day i.

The total percentage return to shareholders (RTt ) on day t is given by the expression:

(RTt ) = [(Pt - Pt -1) + Dt ]/Pt –1

And RMi is the return on the BSE 500 Index on day i.

The market adjusted abnormal returns are calculated as in Equation (1) above. The five-day cumulative

abnormal returns for each firm is calculated as:

5-Day CARij = ARij , for days i = 0, 1, 2, 3, 4

where the announcement day is day 0.

Cumulative abnormal returns are then averaged over the five-day period starting on the announcement

date to obtain the five-day cumulative average abnormal returns as:

5-Day CAR = ( CARj)/n for all firms j = 1,2,…..n

The average cumulative abnormal returns are then compared for statistical difference between the

means in each quintile. Statistical significance in the difference in the means would indicate that abnormal

return is related to the level of repurchases undertaken during the five-day period.

7. RESULTS

Most event studies use the market model to estimate normal performance of a given stock. The main

focus of this study is on stock repurchases, and the sample of repurchase announcements is already relatively

thin. Firms that repurchase stocks are on an average small. Cumulative Abnormal Returns (CAR) in (Table 2.1

and 2.2 –appendix) is consistent with the expectations, the market reacts positively to announcements of both

dividend initiations and stock repurchases. As the computed CAR of repurchases and CAR of dividends

confirms the existence of positive signaling of share price behaviour in the market, hypothesis 1 and 2 are

rejected. Fig 1 and 2 plotted with 5-day pre-CAR and 5-day post – CAR prove the positive signaling effect of

the announcements.

-0.040

-0.020

0.000

0.020

0.040

0.060

0.080

0.100

0.120

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Sam ple firms

CA

R

postpre

Figure 1Share price behaviour around buyback announcements

-0.040

-0.020

0.000

0.020

0.040

0.060

0.080

0.100

0.120

1 3 5 7 9 11 13 15 17 19 21

Sam ple firmspostpre

Figure 2Share price behaviour around dividend announcements

The next step is to identify the event or announcement with a higher signaling power than the other.

For which the mean CAR of repurchase announcement 0.015* was compared with the mean CAR of dividend

announcement 0.014*(* Statistically significant at 0.05 level). The difference between the means was negligible,

even then it can be concluded that the CAR around stock repurchase are higher than CAR around dividend

announcement. Hence, hypothesis 3 on significant difference between the announcements is rejected and

concluded that the market reaction to repurchase announcements was significantly larger than dividends.

Cumulative Abnormal Return surrounding payout announcements in different periods centered on the

announcement day (announcement day = 0) are calculated. Table 3.1& 3.2 presents cumulative abnormal returns

around announcement day. All the analyses use the strongest abnormal returns of the 5- day announcement

period.

Table 3.1Cumulative Abnormal Returns Around the Stock Repurchase Announcements

Days -1 to +1 -2 to +2 -3 to +3 -4 to +4 -5 to +5

Mean CAR3.2* 3.2* 3.1* 2.3* 1.95*

t stat(2.65)* (2.89) (4.23) (3.40) (3.00)

* Significant at the two tailed 0.05 level

Abnormal returns around stock repurchase announcements are significant at all standard levels of

confidence in all time windows. The abnormal returns reach the most statistically significant level of 3.2% in the

1-day window and as the analysed time period widen, the abnormal returns decreases and reach 1.4% in the 5-

day window.

Table 3.2 Cumulative Abnormal Returns Around the Dividend Announcements

Days -1 to +1 -2 to +2 -3 to +3 -4 to +4 -5 to +5

Mean CAR2.08* 1.82* 1.22* 1.07* 1.07*

t stat(3.87) (5.40) (2.71) (2.72) (3.12)*

* Significant at the two tailed 0.05 level

Dividend initiations have the most significant abnormal returns also in the 1-day window. The return

was 2.08% and the lowest being 1.07% at the 5- day window.

Table 3.1 & 3.2 indicates that the overall sample had an average five-day cumulative abnormal return

of 2.35 %(stock repurchases) and 1.45% (dividends). This finding varies from earlier works that concentrates on

the shorter time period of two days after announcement. For example, Ikenberry, Lakonishok, and Vermaelen

(1995) find 2-day abnormal returns of approximately 3%. A possible explanation is that the market reaction in

the Indian market is complete within a day or two.

Cumulative average abnormal returns for both samples — stock repurchases and dividend initiations

around the announcement date were plotted. In Fig 3 the left part of the figure represents a time period, from 5

days prior to announcements and the right part represents the time period of 5 days after announcements. The

divider represents the announcement day ie. day 0. It is evident that stock repurchases have higher abnormal

returns upon announcement than do dividend initiations.

-0.02

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

DAYS (announcement date)

CA

R

Repurchase

Dividend 0

Figure 3CAR Around Announcement Date

To test, hypothesis 4 that stock prices in the post announcement period will reflect the level of stock

repurchase. The sample is divided into quintiles depending on the extent of share repurchases. The first quintile

includes firms with a repurchase level less than 25%, second quintile for firms with 26% - 50%, third quintile

for firms with 51% - 75% and the fourth quintile represents firms with 76% - >100% repurchases. (refer Table

4.1 & 4.2 )

Table 4.1 presents cumulative abnormal returns in 5-day window centered on the repurchase announcementdate.

Cumulative Abnormal Returns Around Stock RepurchasesBetween 2002 - 2004 For Various Repurchase Levels

2002 2003 2004 Total5 day returns

0 - 25% 0.012 0.0031 -0.0035 0.0116

26 - 50% 0.0321 0.0715 0.0044 0.108

51 - 75% 0.0091 - - 0.0091

76 - 100% 0.017 0.014 - 0.031

Total 0.0702 0.0886 0.0009 0.1597

Table 4.2 presents cumulative abnormal returns in 5-day window centered on the dividend announcement date.

Cumulative Abnormal Returns Around Dividend Announcement between 2002 - 2004 For Various Repurchase Levels

2002 2003 2004 Total5 day returns0 - 25%repurchase levels 0.002 0.0154 - 0.0174

26 - 50% “ 0.0036 0.0145 0.0088 0.0269

51 - 75% “ 0.0142 - - 0.0142

76 - 100% “ 0.015 0.032 - 0.047

Total 0.0348 0.0619 0.0088 0.1055

After grouping the firms in quintiles, an examination of the differences between the means (See Table

5-– One way ANOVA) indicate no statistical significance thus implying that any short-term abnormal returns

does not influence subsequent levels of repurchases.

Table 5 One way ANOVA

ANOVASource ofVariation SS df MS F P-value F critBetween Groups 0.0006599 3 0.00022 0.46447 0.711627 3.343885Within Groups 0.0066298 14 0.0004736

Total 0.0072897 17

The statistical insignificance in the difference in the means indicate that abnormal return is not related

to the level of repurchase undertaken during the 5-day period and hence, hypothesis 4 is rejected and concluded

that various repurchase levels do not have an influence on the share price behaviour.

8 CONCLUSION:

The study indicates that stock repurchases and dividend announcements primarily serve as a signaling

mechanism of management’ s view that their firm’ s stock is undervalued. Stock repurchase and dividend

announcements have also been shown to result in positive and statistically significant abnormal returns around

the announcement date. For stock repurchase and dividend announcements the markets immediately signalled

an upward swing in the share price movement. But this positive signaling existed only for a day after the

announcements, after which the extent of positivity of shares started decreasing. A possible explanation is that

the market reaction in the Indian market to events or announcements such as stock repurchases and dividends

was complete within a day or two.

Hence, if management perceives that the announcement has worked to their advantage in contributing

to the rise in price of the shares, they would have accomplished their main objective of enhancing shareholder

value. At the same time, the nature of open market repurchase programs allows firms to take advantage of

changes in stock price and provides flexibility to firms that face uncertain cash flows during the repurchase

period. The findings contained in this paper have significant implications. The short-term effects of the

announcements are consistent with earlier works with positive abnormal returns. More importantly, this study

provides new insights over stock price performance, which is shown to be independent of the level of

repurchase transactions, the implication is that firms will not reap additional stock price benefits from following

through on repurchasing stock after announcing a plan to do so, and the repurchase announcement is sufficient

to obtain abnormal returns. Alternatively, if the market reaction to the repurchase announcement is in response

to a signal of under-pricing, then stock prices may not adjust to reflect the extent of actual stock repurchases.

Investors therefore must view repurchase announcements as a means of short-term gain and not a viable strategy

for significant long-term abnormal gains.

BIBILOGRAPHY

1. Bartov, Eli, 1998, Open-market stock repurchases as signals for earnings and risk changes, Journal ofFinancial Economics 14, 275—294.

2. Bhattacharya, Sudipto, 1979, Imperfect information, dividend policy, and ’ the bird in the hand’ fallacy, BellJournal of Economics 10, 259—270.

3. Comment, Robert, and Gregg A. Jarrell, 1991, The relative signaling power of dutch-auction and fixed-priceself-tender offers and open-market share repurchases, Journal of Finance 46, 1243—1271.

4. Grullon, Gustavo, and Roni Michaely, 2002, Dividends, share repurchases and the substitutionhypothesis,Journal of Finance 57, 1649—1684.

5. Harris, T. C. and I. M. Ramsay (1995). “An empirical investigation of Australian share buybacks,” AustralianJournal of Corporate Laws, 4, 393-416.

6. Ikenberry, David, Josef Lakonishok, and Theo Vermaelen, 1995, Market underreaction to open market sharerepurchases, Journal of Financial Economics 39, 181—208.

7. Jensen, Michael C., 1986, The agency cost of free cash flow, corporate finance and takeovers, AmericanEconomic Review 76, 323—329.

8. Miller, Merton H., and Franco Modigliani, 1961, Dividend policy, growth, and the valuation of shares,Journal of Business 34, 411—433.

9. Miller, Merton H., and Kevin Rock, 1985, Dividend policy under asymmetric information, Journal ofFinance 40, 1031—1051.

10. Nohel, Tom, and Vefa Tarhan, 1998, Share repurchases and firm performance:: New evidence on the agencycosts of free cash flow, Journal of Financial Economics 49, 187—222.

11. Porter, Gary E., Rodney L. Roenfeldt, and Neil W. Sicherman, 1999, The value of open marketrepurchases of closed-end fund shares, Journal of Business 72, 257—276.

12. Stephens, Clifford P. and Michael S. Weisbach 1998. Actual Share Reacquisitions in Open-MarketRepurchase Programs, The Journal of Finance 313 – 333.

13. Stonham, Paul, 2002. “ A game plan for share repurchases,” European Management Journal, 20(1), February37-44.

14. Vermaelen, Theo 1981. Common Stock Repurchases and Market Signaling: An Empirical Study, Journal of Financial Economics 139 –184.

APPENDIXTable 2.1

SRP -5 day pre-CAR Vs 5 day post-CAR

pre post 1 0.074 -0.032

2 0.005 -0.0043 -0.017 0.0624 0.011 -0.0105 0.052 -0.0256 0.019 0.0577 0.020 0.0608 0.021 -0.0069 0.023 0.022

10 0.018 -0.01711 0.010 0.00812 0.006 -0.01113 -0.007 0.11214 0.021 0.01115 0.020 0.05816 -0.003 0.07617 -0.018 -0.00318 0.002 -0.00619 0.041 -0.03520 0.012 -0.00421 -0.008 0.00022 -0.001 -0.014

MEAN 0.0108 0.015744Table 2.2

DIVD-5 day pre-CAR Vs 5 day post-CAR

pre post1 -0.004 -0.0152 0.010 -0.0153 0.035 -0.0634 0.006 -0.0095 0.010 -0.0026 0.027 0.0757 0.030 0.0648 0.003 0.0059 0.022 0.020

10 0.022 0.00511 -0.009 0.02912 -0.001 0.01813 -0.033 0.02214 0.087 -0.05515 -0.007 0.10916 0.001 0.01717 0.001 -0.00918 -0.007 -0.00219 -0.010 0.01220 0.010 0.00421 -0.003 0.011

MEAN 0.010 0.012

AUTHORS PROFILE

1. Dr. P. Thirumalvalavan – is currently surviving as Reader, School of Management and

Entrepreneur Development, Bharathiar University. He holds 28 years of teaching experience and

has specialised in the area of Finance and Investments. He has attended a number of National

Level and International Level Seminar and has published many research articles in National and

International Journals. He has also served as a Dean, College of Business Studies, AL Ghurair

University, Dubai and was instrumental in getting AACSB accreditation for it’ s Under – Graduate

Programmes. He has guided number of research projects.

2. K. Sunitha – is a Full time Ph. D Research Scholar, School of Management and Entrepreneur

Development, Bharathiar University. She holds about 8 years of teaching experience and has

specialised in the area of Equity Research. She has attended a number of National Level Seminars

and conferences.