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Abstract
Public sector units (PSU) in India are considered as major contribution to Indian Economy and they are growth indicators for GDP. Some PSU are considered as sick units due to their dysfunctionality while some PSUs Has expanded their operations. There is need in the study of the behavior of the PSUs in providing returns to share holders and study how PSUs are contributing to wealth maximization. There are number factors to analyze and most important factor to analyze is Interim dividend announcements which are given by companies before Annual final dividends. Some PSUs announced interim dividend announcements twice in year so there is need to study effect of interim dividend announcement on stock prices.20 PSU announced interim dividend announcements in 2017 and standard event study methodology is used for study.. The semi strong efficiency of Indian market is analyzed. Some PSU Reacted positively and some has reacted negatively. Cash-rich PSUs, such as ONGC, SAIL, BSNL and NTPC, are under pressure to declare interim dividends as the government looks at these companies to raise as much as Rs 10,000 crore to shore up its increasingly fragile finances. The government, which is seeing declining tax collections amid a slowing economy, will be the biggest beneficiary of any dividend payouts since it holds a bulk of the equity in these companies. The study also used market model for PSU listed in N.S.E and companies returns showed the positive and negative Abnormal returns during the study. T test analysis is conducted to test the significance of abnormal returns.