The impact of dividend announcements on firm value: an event study of the case of the NSE

Abstract

This research uses the event study methodology to analyze the impact of one type of disclosure dividend announcements, on the firm value as measured by stock price. We investigate the information content of dividend announcements for four firms in the Nairobi Stock Exchange for the period 1999-2003. The study provides additional empirical evidence to the existing body of knowledge on whether dividend announcements convey useful information about the future value of a firm. After controlling for clustering, the results based on an estimation window of more than 100 trading days show that, for the analyzed firms, dividend announcements do indeed convey useful information about the future value of a firm listed in the NSE.