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Do markets learn from experience? Price reaction to stock dividends in the Turkish market

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  • Kursat Aydogan
  • Gulnur Muradoglu

Abstract

In this paper we provide an empirical analysis of the announcement and implementation of rights issues and stock dividends in the thinly traded Istanbul Stock Exchange. The efficiency of the Turkish market with respect to this information set is tested at different time horizons characterized by different development levels of the market. Evidence is detected of different price reactions for the different development phases of the market as well as for the board meeting and actual implementation information. As the market matures, neither the board meeting nor the actual implementation of stock dividends-rights offerings cause significant price reactions. Besides the traditional event study methodology, non-parametric tests such as sign and rank tests are also employed but are found to be unsuitable for this particular case.

Suggested Citation

  • Kursat Aydogan & Gulnur Muradoglu, 1998. "Do markets learn from experience? Price reaction to stock dividends in the Turkish market," Applied Financial Economics, Taylor & Francis Journals, vol. 8(1), pages 41-49.
    • Handle: RePEc:taf:apfiec:v:8:y:1998:i:1:p:41-49
    DOI: 10.1080/096031098333230
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    References listed on IDEAS

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    9. Martikainen, Teppo & Rothovius, Timo & Yli-Olli, Paavo, 1993. "On the individual and incremental information content of accrual earnings, cash flows and cash dividends in the Finnish stock market," European Journal of Operational Research, Elsevier, vol. 68(3), pages 318-333, August.
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    1. Taeyoon Sung & Daehwan Kim & Ludwig Chincarini, 2006. "Corporate scandals and the market response of dividend payout changes," Applied Financial Economics, Taylor & Francis Journals, vol. 16(7), pages 535-549.
    2. Adaoglu, Cahit, 2006. "Market reaction to "unsweetened" and "sweetened" rights offerings in an emerging European stock market," Journal of Multinational Financial Management, Elsevier, vol. 16(3), pages 249-268, July.
    3. Selim Tuzunturk, 2009. "The relationship between volatility and volume on the Istanbul stock exchange," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 1(3), pages 289-304.
    4. Eyup Kadioglu & Nurcan Ocal, 2016. "Dividend Changes and Future Profitability: Evidence from the Turkish Stock Market," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 196-205, March.
    5. Consuelo Riano & Fco. Javier Ruiz & Rafael Santamaria, 2007. "Determinants of the underpricing of new shares during the subscription period: empirical evidence from the Spanish stock exchange," Applied Financial Economics, Taylor & Francis Journals, vol. 17(7), pages 521-540.

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