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|Title||Dividend Announcement and Stock Price Movement: Evidence from China’s Financial Sector|
|Institution||University of Zurich|
|Faculty||Faculty of Business, Economics and Informatics|
|Number of Pages||29|
|Abstract Text||This research examines the relationship between stock price and dividend policy in China's banking industry, using the event study approach and multiple variable linear regression. The thesis utilises China's specific stock market rule that permits corporations to provide preliminary earnings reports to quantify the individual effect of dividend announcements on stock prices. The empirical study results support the hypothesis that dividends convey private information to investors. During the event window, significant abnormal returns are observed on the stock market. The thesis identifies a significant abnormal return of 0.35% one day prior to dividend announcements when dividends increase. In contrast, samples with decreasing dividends demonstrate substantially negative abnormal returns for 4 consecutive days. There is a total abnormal return of -2.25% for the week preceding the dividend announcement. The market has no abnormal return if dividends remain unchanged. The results of the regression indicate that dividend yield has a significant negative effect on stock price volatility.|