effect on share price

[eShA]

well before the announcement of the dividend more offently here in pakistan share prices decrease very sharply.. wht could be the reason to it.. and aslo write abt whether this pervail in different market or not (london, well street, sensex and other famous stock market.)



regard,,,,
eShA


Although this may seem a paradox, all exact science is dominated
by the idea of approximation.

[Ice_Blue]

post hock fallacy

Ice Blue

[derivativetrader]

<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by eShA</i>
<br />
well before the announcement of the dividend more offently here in pakistan share prices decrease very sharply.. wht could be the reason to it.. and aslo write abt whether this pervail in different market or not (london, well street, sensex and other famous stock market.)



regard,,,,
eShA


Although this may seem a paradox, all exact science is dominated
by the idea of approximation.



<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

This comes under Behavoural Finance and some of the possible reasons are,

1. Since dividends would be paid to shareholders and are opportunity cost to future investments, R&D etc., so market might take a negative view on dividend announcement.

2. Analysts might were expecting a higher dividend annoucement but because financial results were below expectation or at expectation, therefore, market would take a negative view on this firm's share price.

3. There might have some leakage of private information that this time dividends would be at a lower rate.

As I said there could be number of other theories on this.

DT