Abstract:- The study was carried out to examine the effect of firm dividend policies on their respective stock prices. Ten years (2006-2015) panel data was collected from fourteen selected firms of the sector on the basis of the availability of data. Random Effect Model of Regression was used to check the link between the one dependent Market Price and five independent variables i.e. Dividend Yield, Retention Ratio, Profit after Tax, Earnings per Share and Return on Equity. To check various anomalies in data tests were applied. This study found significantly negative relationship of Dividend Yield and Retention Ratio with Market price but significant and positive affiliation of Profit after Tax and Earning per Share with Market Price. But no evidence found the impact of Return on Equity with Market Price. This study found mixed results about chief determinants like dividend yield and retention ratio. Reciprocally did not match each other to support Dividend Relevance theory. On the basis of results this study recommended to the management to develop best policy by considering shareholders wealth and growth of companies.
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