Navigating the impact of dividend announcement on investment decisions

Abstract

The literature on investors’ behaviour towards dividend announcement indicates that although, dividend announcements are not typically used by investors as an indicator for short-term investments, they provide valuable information about the timing of investments in stocks of the companies. This article attempts to examine investors’ awareness about dividend announcements and analyse the impact of investors’ reaction for dividend announcements on their investment decisions. The results of responses of sampled retail investors using SMART-PLS 4 reveal that dividend announcements significantly influence investment decisions, meaning that the investors’ view dividend announcements as a crucial tool for strategic portfolio planning aiding in wealth maximization. It highlights the importance for investors to monitor dividend announcements closely, as they play key role in refining investment strategies and making informed decisions. Further, it underscores the need for investors to integrate dividend information into their broader financial planning to achieve optimal investment outcomes.