Title:
MEASURING MARKET RESPONSE TO DIVIDEND ANNOUNCEMENTS OF VALUE AND GROWTH STOCK COMPANIES THROUGH INFORMATION CONTENT

Authors:
Dr. Saad Majeed Al-Janabi, Iraq

Abstract:
The main objective of this research is to demonstrate the extent of the market's response to dividend announcements for value and growth stock companies through information content and to demonstrate the impact of information content and its reflections on the returns of these stocks through the daily event window, which lasts for 21 days, and to provide information to help investors make rational decisions to eliminate the problem of asymmetry of information between insiders (managers) and investors, because information content sends signals to investors in the financial market that they can interpret either positively or negatively, and whose content indicates that the company's management believes that the shares are traded in the financial market at less or more than their real value. The research relied on a sample consisting of (70) dividend announcements by (27) companies from various sectors listed in the Iraqi Financial Market for the period from 1/1/2016 to 31/12/2023. The sample companies were classified into value stocks and growth stocks based on the book value to market value. If the book value is greater than the market value, they are considered value stocks, and if the opposite is true, they are considered growth stocks. Using a number of financial and statistical methods through the EXCEL and SPSS-26 programs in order to analyze the research variables and test its hypotheses, the research reached a number of conclusions, the most important of which was that the results of the event window study proved that value and growth stocks are strongly related to the content of information sent to the Iraqi stock market through dividend announcements, which contradicts the first and second hypotheses. This was proven through the results of the daily averages of the accumulated abnormal returns of value stock companies, which were higher than the averages of growth stocks through the event window. Based on this, the research came out with a number of recommendations, perhaps the most important of which is that the management of the Iraq Stock Exchange should realize the danger of the market's inefficiency in responding to public information in general and dividend announcements in particular, because this could be exploited by some professionals to formulate trading rules that enable them to achieve abnormal returns at the expense of investors. In the market, causing a disruption in market performance.