| Abstract [eng] |
Dividends are treated as “one of the 10 unsolved problems in Finance” (Brealey and Myers 2003), although since the emergence of modern financial theory analysts, investors and theorists were interested in dividends. Answers to questions on dividends are complicated, because the dividend decisions affect the interests of two parties - the shareholders and the company. Distribution of profit must balance shareholder and the company's cash needs of present and future time. Typically, these requirements contradict each other - the shareholders expect income from dividends and the company needs funds for modernization and development activities. Choice of the dividend policy can increase the attractiveness of investment and jointly regulate the stock market value. Three theories of dividend policy has been formed to explain the relation between dividend and the share price and to help company to make dividend policy decisions. Many authors performed empirical studies to confirm dividend policy theories in practice but the results are contradictory. Different research methodologies and a variety of factors, in addition to the dividend influencing stock price, does not uniquely determine the dividend and the stock price connection. The object of research: Baltic stock market on relation between dividends and stock price aspect. The aim of paper: to study the relation of dividends ant stock price and determine the affect of dividend announcement in Baltic stock market and dividend payment influence on stock price. In pursuance of the aim there are examining these tasks:  Disclose the role of dividend in market and formulate the reasons of dividend and stock price relation of the dividend role in market.  To introduce the practical and theoretical profit allocation perspectives and stock price regulation possibilities.  Exclude the moments of relation between dividends and stock price formation in dividend payment process.  Define the methods for dividend and stock price relation evaluation in Baltic stock market.  Assess dividend announcement influence on stock price and define the affect of dividends on Baltic stock market.  Analyze the dividend payment influence on stock price. The structure of the paper: The first part of work deals with the role of dividends in market and company profit allocation decisions, also dividend payment mechanism. The second part is devoted to investigate theoretical research results and discuss the dividend and stock price relation on Baltic stock market research tools and methods. The third section summarizes the results of Baltic stock market research defining the affect of dividend announcement and payment on stock price. The results of research confirm informational dividend influence on stock price on Baltic stock market. The relation of dividends and stock price is the strongest on short period before or after dividend announcement in Lithuanian market, before dividend announcement in Latvian market and after in Estonia. The relation between dividends and stock price in Baltic stock price because of dividend payment evidence stock price fall on ex-dividend day. The results of Latvian stock market shows that the fall of stock price on ex-dividend day is equal to dividend sum. Stock prices fluctuations, in Lithuanian and Estonian stock market on ex-dividend day, are unpredictable and do not support the claims of dividend theories. |
