Does Categorization Influence Price Behavior of Shares? A Study on Dhaka Stock Exchange

Abstract

Appropriate information has an important implication for the investment analysis and management of portfolio. Various signaling devices are used to convey this information to potential investors. Categorization of shares is one of them. It aims at providing the investors’ information with company performance in order that it helps the investors a lot in choosing companies before making decision. So it argues that the categorization influences price behavior of shares. This study actually concentrates on finding out whether categorization of securities has any impact on price behavior of shares. In assessing the impact, a non-parametric statistical test (Chi-square test) and ANOVA technique have been carried out on some selected securities traded in DSE. The study reveals that categorization does not influence the price behavior of shares. It is hoped that this study will draw attention for further study to improve the concept of ‘Categorization’ as a signaling device.