ISSN No - RBS

Thus, this paper has incorporateddividend announcement both in preannouncement and postannouncement face as the mainvariable.Dividend declaration depends uponthe existing rate of growth and rate ofreturn of the particular company. Thedeclaration of dividend by everycompany undergoes a formal process.There are three important datesinvolved in the process: declarationdate, date of record and payment date.The declaration date signifies theintention of the board of directors ofthe company to pay dividends to itsshareholders. The date of record alsoreferred to as ex-dividend date whichrefers to record of owner of the sharebefore this date. The dividend will beprovided to the shareholder who holdsthe share before this due date. Itmeans that if the share is sold afterex-dividend date, dividend will still beavailable with the previous owner ofthe share. The payment date refers tothe date of disbursement or actualpayment of the dividend. Thus, exdividenddate is the real base forstudying the impact of dividenddeclared. The present study focusesupon finding out dividendannouncement effects on stock returnsof the companies in various segmentsof the Indian economy. The stocksfrom four different sectors frequentlytraded at National Stock Exchange inIndia have been taken and theirrespective stock prices are included inthe total sample size to find out theimpact of dividend announcements onabnormal stock returns.REVIEW OF LITERATUREDecember 2010 Vol. 7, Issue 2The researchers and academicians inIndia as well as abroad have madecontribution in their researches ondividend policies and announcementeffect of dividends on stock prices. Al-Obaidan Abdullah M. (2008)contributed in major with quantitativeand relevant measures of theinformation content of dividends inbanks located in emerging markets.Brown Lawrence D. (2008) related theinformativeness of earnings anddividend announcements to theirtiming relative to the fiscal quarterend to which the earnings pertain.Eriotis Nikolaos (2007) discoveredthat existence of a long term dividendpolicy stood partly unaffected by thelevel of current period earnings.Hazak Aaro (2007) presented atheoretical model on dividend policyfor distributed profit taxation which isthe corporate taxation regime ofEstonia. Henry Elaine (2006)examined market reactions to firm’searnings announcements. The studyextended the examination to include abroad range of concurrent disclosurecontained in earnings press releases,the financial disclosures captured asaccounting ratios and verbalcomponents of disclosure which werecaptured using elementary computerbased content analysis. Hochberg YaelV. (2003) examined the effects ofventure capital backing on thecorporate governance of the firmfollowing the IPO. The studyconducted three independent sets oftests which examined effectively howgovernance and monitoring differedfor venture and non-venture backedfirms. How Janice C. Y. (2007)observed that in a relatively lesslitigious environment like Australia itwas common to find IPO firms thatvoluntarily provided forecasts in theirDividend declarationdepends upon theexisting rate ofgrowth and rate ofreturn of theparticular company.[ 101 ]