Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index
This paper attempts to determine the impact of dividend policy on stock price in Pakistan. A sample of 20 textile listed companies in PSX is examined for a period from 2010 to 2017. The empirical estimation is based on a panel regression analysis of the relationship between dividend policy and share price and also used fixed effect model. Secondary data were used by the researcher in the study. The study has taken share price as a dependent variable while the dividend policy is an independent variable. The dividend policy was measure by different proxy such as SDS, DPR, EPS, PAT and ROE. The result explained that the ROE and EPS have significant positive relationship with share price while the SDS, PAT and DPR have negative association with share price. Although the results are not robust enough as in the case of developed markets but are consistent with the behavior of emerging markets
-
Dividend Policy, Share Price
-
(1) Sanaullah Khan
MBA Student, Institute of Business Studies and Leadership, Abdul Wali Khan University Mardan, KP, Pakistan.
(2) Muhammad Faizan Malik
Assistant Professor, Institute of Business Studies and Leadership, Abdul Wali Khan University Mardan, KP, Pakistan.
(3) Shehzad Khan
Assistant Professor, Institute of Business Studies and Leadership, Abdul Wali Khan University Mardan, KP, Pakistan.
- Abdullah, H., Asad, Z. & Rashed, K. (2013). The Effect of Dividend Policy on Share
- Price: An Evaluative Study, Journal of Economics and Finance, 1(4): 6-11.
- AL-Shubiri, F. N. (2012). Determinants of Changes Dividend Behaviour Policy:
- Evidence from the Amman Stock Exchange. Far East Journal of Marketing and Management, 2(2): 1-15.
- Al-Kuwari, D. (2009). Determinants of the Dividend Policy in Emerging Stock
- Exchanges: the Case of GCC Countries. Global Economy & Finance Journal, 2(2): 12-17
- Allen, D. E. and Rachim, V. S. (1996). Dividend Policy and Share Price Volatility:
- Australian Evidence. Applied Financial Economics, 6 (1): 175-188.
- Allen, D. E., & Rachim, V. S. (1996). Dividend policy and share price volatility:
- Australian evidence. Applied Financial Economics, 6(2):175-188
- Appannan, S., & Lee, W. S. (2011). Liquidity, the Value of the Firm, and Corporate
- Finance. Applied Financial Economics, 9 (1): 75-197.
- Finance. Applied Financial Economics, 9 (1): 75-197.
- Asghar, M., Shah, S. Z. A., Hamid, K., & Suleman, M. T. (2011). Impact of Dividend
- Policy on Share price Risk: Empirical Evidence from Equity Market of Pakistan. Far East Journal of Psychology and Business, 4(1): 45-52.
- Ball, R., Brown, P., Finn, F. J., & Officer, R. (1979). Dividends and the Value of the Firm: Evidence from the Australian Equity Market. Australian Journal of Management, 4(1): 13-26.
- Baskin, J. (1989) Dividend Policy and the Volatility of Common Stock. Journal of Portfolio Management, 15(3): 19-25.
- Brave, A., Graham, J. R., Harvey, C. R., & Michaely, R. (2003). Payout Policy in the 21st Century. NBER Working Paper Series, 13(1): 35-57.
- Bollen, K. A., & Brand, J. E. (2008). Fixed and Random Effects in Panel Data Using Structural Equations Models. California: California University Press.
- Chhetri, G.R. 2008. Dividend and Share prices: A Case of Nepal. Dissertation M.Phil. University of Tribhuvan.
- Diamond, J. J. Earnings Distribution and the Evaluation of Shares: Some Recent Evidence. Journal of Financial and Quantitative Analysis, 2(1): 15-30.
- Graham, B., Dodd, L. and Cole, S. (1962). Security Analysis. New York: McGrawHill.
- Gordon, M. J. (1963). Optimal Investment and Financing Policy. Journal of Finance, 18 (2): 264-272.
- Gordon, M. J. (1959). Dividends Earnings and Share Prices. The Review of Economics and Statistics, 41(2): 99-105.
- Healy, P.M. and Palepu, K.G. (1988). Earnings Information Conveyed by Dividend
- Initiations and Omissions. Journal of Financial Economics, 21(1): 149-175.
- Ho, H. (2002). Dividend Policies in Australia and Japan. international Advances in Economics, 11(1): 91-100
- Hussainey, K., Chijoke O. M. & Aruoriwo, M. Dividend Policy and Share Price Volatility: UK Evidence. Journal of Risk Finance, 12(1): 55-79.
- Ilaboya, O. J., & Aggreh, M. (2013). Dividend Policy and Share Price Volatility. Journal of Asian Development Studies, 2(2): 109-122.
- Jecheche, P. (2013). Dividend Policy and Share price Volatility: A Case of the Zimbabwe
- Stock Exchange. New York: New York University Press.
- Jakata, O., & Nyamugure, P. (2012). The Effects of Dividend Policy on Share Prices:
- Empirical Evidence from the Zimbabwe Stock Exchange. World Development, 66(1): 30 55.
- Jensen, M., & Meckling, W. S. (1976). Theory of Firm: Managerial Behavior and Ownership Structure, Journal of Finance and Ecnomics, 11(1): 30-60.
- Javed, A., & Ahmad, H. (2009). Dynamics and Determinants of Dividend Policy in Pakistan: Evidence from Pakistan Stock Exchange Non-financial Firms. International Journal of Finance and Economics, 7(3): 148-179.
- Kanwal, I. K., Muhammad, A., Arslan, Q., Adeel, N., Maryam, I. K. Can Dividend Decisions Affect the Share prices: A Case of Dividend Paying Companies of PSX, International Research Journal of Finance and Economics, 76(3): 67-74.
- Kenyoru, N.D., Kundu, S.A., & Kibiwott, L.P. (2013). Dividend Policy and Share Price Volatility in Kenya. Research Journal of finance and accounting, 4(6): 115-120.
- Khan , M. (2011). Dividend Policy and Share Prices. Journal of Finance, 11(3): 15-39.
- Lintner, J. (1956). Distribution of Incomes of Corporations Between Dividends, Retained
- Earnings and Taxes. American economic review, 13(1): 97-112.
- Lintner, J. (1956). Distribution of Incomes of Corporations Between Dividends, Retained Earnings. American economic review, 13(3): 95-112.
- Liu, S., & Hu, Y. (2005). Empirical Analysis of Cash Dividend Payment in Chinese Listed Companies. Nature and Science, 1 (3): 65-70.
- Mamun, A., Hoque, N. & Mamun, A. (2013). Stock Price Reaction to Dividend Announcement: The Case of Bangladesh Capital Market. Journal of Economics and Sustainable Development, 4(8): 3-7.
- Muhammad, A. & Baig, H. (2010). Reaction of Share Prices to Dividend Announcements and Market Efficiency in Pakistan. The Lahore Journal of Economics, 15 (1): 103- 125.
- Ming, D., Chris, A. & Robinson, C. V. (2005). Why Individual Investors Want Dividends, Journal of Corporate Finance, 1(1): 121-158.
- Miller, H. M., & Modigliani, F. (1961). Dividend Policy, Growth and the Valuation of Shares. The Journal of Business, 34(4): 411-433.
- Murekefu, T.M. & Ouma, O.P. (2012). The Relationship between Dividend Payout and Firm Performance: A Study of Listed Companies in Kenya. European Scientific Journal, 8(9): 199-215.
- Morgan, J. P. (2011). Dividends: The Guide to Dividend Policy Trends and Best Practices. London: London University Press.
- Nazir, M. S., Muhammad M. N., Waseem, A. & Farhan, A. (2010). Determinants of Share price Volatility in Pakistan Stock Exchange: The Mediating Role of Corporate Dividend Policy. International Research Journal of Finance and Economics November, 21(1): 14-28.
- Nazir, M.S., Abdullah & Nawaz, M. M. (2012). How Dividend Policy Affects Volatility of Share Prices of Financial Sector Firms of Pakistan. American Journal of Scientific Research, 61(1): 132-139.
- Nishat, M. (1999). The Impact of Institutional Development on Share rice. International Journal of Finance, 11(3): 121-147.
- Nishat, M. & Chaudhary, M. I. (2003). Dividend Policy and Share Price Volatility in Pakistan. Economics and Accounting, 3(1). 17-51.
- Pradhan, R. S. (2003). Effects of Dividend on Common Share Prices: The Nepalese Evidence. Research in Nepalese Finance. Katmandu: Buddha Academic Enterprise.
- Raballe, J. & Hedensted, J. S. (2008). Dividend Determinants in Denmark. Journal of Applied Corporate Finance, 7(1): 4-17.
- Ross, S. A., Westerfield, R. W. & Jorden, B. D. (2010). Fundamental of Corporate Finance. London: Tata McGrew Hill.
- Sharma, S. (2011). Determinants of Equity Share Prices in India. Journal of Arts, Science & Commerce, 2(4): 51-60.
- Subramaniam, R. & Devi, S. S. (2010). Corporate Governance and Dividend Policy in Malaysia. International Conference on Business and Economics Research, 7(3): 200-207.
- Travlos, N., Trigeorgis, L. & Vafeas, N. (2001). Shareholder Wealth Effects of Dividend Policy Changes in an Emerging Stock Market: The Case of Cyprus. Multinational Finance Journal, 5(2): 87-112.
- Tahir, A. & Raja, N. (2014). Impact of Dividend Policy on Shareholder Wealth. Journal of Business and Management, 16(1): 24-33.
- Weston, J. F., Copeland, S., Thomas, E. & Shastri, K. (2004). Financial Theory and Corporate Policy. London: Pearson Publication.
- Zakaria, Z. Joriah, M. & Zulkifli, A. H. The Impact of Dividend Policy on the Share Price Volatility: Malaysian Construction and Material Companies. International Journal of Economics and Management Science, 2 (5): 21-41.
Cite this article
-
APA : Khan, S., Malik, M. F., & Khan, S. (2018). Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index. Global Social Sciences Review, III(IV), 616-630. https://doi.org/10.31703/gssr.2018(III-IV).42
-
CHICAGO : Khan, Sanaullah, Muhammad Faizan Malik, and Shehzad Khan. 2018. "Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index." Global Social Sciences Review, III (IV): 616-630 doi: 10.31703/gssr.2018(III-IV).42
-
HARVARD : KHAN, S., MALIK, M. F. & KHAN, S. 2018. Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index. Global Social Sciences Review, III, 616-630.
-
MHRA : Khan, Sanaullah, Muhammad Faizan Malik, and Shehzad Khan. 2018. "Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index." Global Social Sciences Review, III: 616-630
-
MLA : Khan, Sanaullah, Muhammad Faizan Malik, and Shehzad Khan. "Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index." Global Social Sciences Review, III.IV (2018): 616-630 Print.
-
OXFORD : Khan, Sanaullah, Malik, Muhammad Faizan, and Khan, Shehzad (2018), "Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index", Global Social Sciences Review, III (IV), 616-630
-
TURABIAN : Khan, Sanaullah, Muhammad Faizan Malik, and Shehzad Khan. "Impact of Dividend Policy on Share Price Evidence from Textile Sector PSX-100 Index." Global Social Sciences Review III, no. IV (2018): 616-630. https://doi.org/10.31703/gssr.2018(III-IV).42