Dividend Announcement and its Impact on Stock Prices of Indian Automobile Companies

The academic fraternity differs in its view as to whether corporate announcements such as Dividend, Bonus Declaration, and Stock Split etc. have an impact on the value of a company. The current study was undertaken with the purpose of understanding one such corporate announcement viz. Stock Dividend declaration and its impact on the stock prices of 16 auto companies constituting S&P BSE Auto Index. BSE listed Auto companies having announced dividends over the period April 2012 through October 2016 were selected as sample data. The impact of Dividend announcement effect on stock prices was gauged by examining the daily returns of these stocks using paired sample t-test. The results of paired t-test show that there are significant differences in average number of transactions before and after announcement during the period 2012 to 2016 for the companies like Bharat Forge, Bosch, MRF, Maruti Suzuki, Motherson Sumi, TVS Motor and Tata Motors DVR.