The Impact of Dividend Policy on Share Price Volatility in the Malaysian Stock Market

Journal of Business Studies Quarterly, Vol. 4, No. 1, 2012

19 Pages Posted: 16 Sep 2012

See all articles by Mohammad Hashemijoo

Mohammad Hashemijoo

Florida International University (FIU); Multimedia University (MMU)

Aref Mahdavi Ardekani

Université de Limoges, LAPE

Nejat Younesi

Multimedia University (MMU)

Date Written: 2012

Abstract

The purpose of this study was to examine the relationship between dividend policy and share price volatility with a focus on consumer product companies listed in Malaysian stock market. For this purpose, a sample of 84 companies from 142 consumer product companies listed in main market of Bursa Malaysia were selected and the relationship between share price volatility with two main measurements of dividend policy, dividend yield and payout, were examined by applying multiple regression for a period of six years from 2005 to 2010. The primarily regression model was expanded by adding control variables including size, earning volatility, leverage, debt and growth. The empirical results of this study showed significant negative relationship between share price volatility with two main measurements of dividend policy which are dividend yield and dividend payout. Moreover, a significant negative relationship between share price volatility and size is found. Based on findings of this study, dividend yield and size have most impact on share price volatility amongst predictor variables.

Keywords: Dividend policy, Share Price, Corporate Finance, Risk Management

JEL Classification: G32, G35, P34

Suggested Citation

Hashemijoo, Mohammad and Mahdavi Ardekani, Aref and Younesi, Nejat, The Impact of Dividend Policy on Share Price Volatility in the Malaysian Stock Market (2012). Journal of Business Studies Quarterly, Vol. 4, No. 1, 2012. Available at SSRN: https://ssrn.com/abstract=2147458

Mohammad Hashemijoo

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Multimedia University (MMU) ( email )

Jalan Multimedia
Cyberjaya, Selangor 63100
Malaysia

Aref Mahdavi Ardekani (Contact Author)

Université de Limoges, LAPE ( email )

5 rue Félix Eboué BP3127
LIMOGES, 87031
France

Nejat Younesi

Multimedia University (MMU)

Jalan Multimedia
Cyberjaya, Selangor 63100
Malaysia

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