Market reaction to dividend announcements during COVID-19 pandemic in ASEAN countries
Asia-Pacific Journal of Business Administration
ISSN: 1757-4323
Article publication date: 13 January 2025
Abstract
Purpose
This study aims to investigate the market reaction to dividend announcements in five ASEAN countries during the COVID-19 pandemic. We focus on sectors that are less vulnerable during the COVID-19 pandemic, such as communication services, consumer staples, healthcare and information technology.
Design/methodology/approach
A sample of 5,648 dividend announcements from listed companies is utilized for this study, employing the event study method. The market reaction is measured using cumulative abnormal return (CAR), and cross-section regression is employed to examine the determinants of market reaction.
Findings
The findings reveal a significant positive reaction in the communication services, consumer staples, healthcare and information technology sectors following the announcement of an increase or decrease in dividends. These results imply that dividend increase announcements serve as a positive signal for investors amidst the COVID-19 pandemic. However, the market does not respond significantly to announcements of decreased and constant dividends during the pandemic as they are perceived as unfavorable signals. This paper also highlights the role of dividends as a communication tool through which companies express optimism in facing the challenges posed by the COVID-19 pandemic to their investors.
Practical implications
This study highlights the role of dividends as a communication tool through which companies express optimism in facing the challenges posed by the COVID-19 pandemic to their investors.
Originality/value
This study offers a novel cross-country analysis of the market reaction to dividend announcements in the ASEAN region, considering both the pandemic and post-pandemic periods and focusing on sectors less impacted by COVID-19. Unlike previous studies that are limited to single-country or sector-specific analyses, our research uniquely addresses the broader ASEAN context and includes insights into the “new normal” period.
Keywords
Citation
Yudaruddin, R. and Lesmana, D. (2025), "Market reaction to dividend announcements during COVID-19 pandemic in ASEAN countries", Asia-Pacific Journal of Business Administration, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/APJBA-06-2023-0266
Publisher
:Emerald Publishing Limited
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