Abstract
The paper examines the ex-dividend day price behavior of the listed stocks in Karachi Stock Exchange for the period January 2009 to June 2010. During the examined period, there was no capital gain tax; however a 10% withholding tax applied on dividends. We use the standard event study methodology to examine the abnormal returns for days surrounding the exdividend day. The study reports a very low price drop ratios compared to their theoretical values. No significant excess returns are found on the exdividend day; however, significant positive abnormal returns are observed in the pre-event window and negative excess returns are observed in the post event window. The study provides evidence of short-term trading hypothesis surrounding the ex-dividend days on Karachi Stock Exchange.
Keywords
Ex-dividend date, Clientele effect, Market microstructure, Short-Term trading, Karachi Stock Exchange
DOI
https://doi.org/10.54784/1990-6587.1311
Journal of Economic Literature Subject Codes
G35, G14
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Recommended Citation
Tauseef, S., & Nishat, M. (2015). The ex-dividend day stock price behavior: Evidence from Pakistan. Business Review, 10(1), 21-30. Retrieved from https://doi.org/10.54784/1990-6587.1311
