Impact of Dividend Policy, Earning Per Share, Return on Equity, Profit after Tax on Stock Prices

Hunjra, A. I., Ijaz, M. S, Chani, M. I., Hassan, S. and Mustafa, U. (2014). Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices. International Journal of Economics and Empirical Research. 2(3), 109-115

7 Pages Posted: 29 Aug 2018

See all articles by Ahmed Imran Hunjra

Ahmed Imran Hunjra

University of Waikato; Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Muhammad Ijaz

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Dr. Muhammad Irfan Chani

COMSATS University Islamabad

Sabih ul Hassan

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Umer Mustafa

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Date Written: 2014

Abstract

Purpose: The volatility in stock prices is one of the most discussed topics in finance. Many studies have been conducted to find the factors which cause fluctuation in stock prices and different results have been found. In this study an attempt has been made to see the affect of dividend yield, dividend payout ratio, return on equity, earning per share and profit after tax on stock prices in Pakistan. For this purpose four non financial sectors (Sugar, Chemical, Food and personal care, Energy) have been selected. A sample of 63 companies listed at Karachi stock exchange was analyzed for the period of 2006-2011.
Methodology: Ordinary least square regression model has been applied on panel data.
Findings: The results indicate dividend yield and dividend payout ratio which are both measures of dividend policy have significant impact on stock price. Dividend yield is negatively related with stock price and dividend payout ratio is positively related with stock price which means that these results are against dividend irrelevance theory. For other independent variables profit after tax and earnings per share have significant positive impact on stock price and return on equity which shows positive insignificant impact on stock price.
Recommendations: This paper shows new insights for policy makers to improve the performance of Karachi stock exchange.

Keywords: Dividend Policy, Stock Price, Dividend Irrelevance Theory

Suggested Citation

Hunjra, Ahmed Imran and Ijaz, Muhammad and Chani, Muhammad Irfan and ul Hassan, Sabih and Mustafa, Umer, Impact of Dividend Policy, Earning Per Share, Return on Equity, Profit after Tax on Stock Prices (2014). Hunjra, A. I., Ijaz, M. S, Chani, M. I., Hassan, S. and Mustafa, U. (2014). Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices. International Journal of Economics and Empirical Research. 2(3), 109-115. Available at SSRN: https://ssrn.com/abstract=3229692

Ahmed Imran Hunjra (Contact Author)

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Muree Road Rawalpindi
Shamsabad, Punjab 44000
Pakistan
00923457162527 (Phone)

Muhammad Ijaz

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Rawalpindi, 44000
Pakistan

Muhammad Irfan Chani

COMSATS University Islamabad ( email )

Mailsi Road
Off Multan Road
Vehari, Punjab
Pakistan

HOME PAGE: http://ww3.comsats.edu.pk/faculty/FacultyDetails.aspx?Uid=19095

Sabih Ul Hassan

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Rawalpindi, 44000
Pakistan

Umer Mustafa

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Rawalpindi, 44000
Pakistan

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