The Effect of Dividend Policy on Share Price Volatility in Pakistan

34 Pages Posted: 3 Sep 2020

See all articles by Mehek Naz

Mehek Naz

Karachi University Business School

Danish Ahmed Siddiqui

University of Karachi - Karachi University Business School

Date Written: August 26, 2020

Abstract

The purpose of this paper is to investigate the relationship between the share price volatility in Pakistan and their dividend policies which affect the share price. We use dividend yield and dividend payout as proxies of dividend policy, and regress these ratios together with other control variables. We model share price volatility as a function of dividend policy which is proxies through dividend yield and dividend payout ratios using data for the period 2010–2019 collected from Karachi stock exchange. The variables involved in the study were Dividend yield, Price volatility Earning Volatility, Payout ratio, size were independent variables and Price volatility is dependent variables. The findings of this study are that the payout ratio and price volatility is significantly positively related. The size and debt are negatively related to share price volatility. This study proposed that dividend yield is a better and more important determinant factor in determining share price volatility in the KSE 100 index rather than payout ratio.

Keywords: Corporate finance, Stock markets, Dividends, Share price volatility, Size and growth of industries

JEL Classification: G10, G14, G32, G35

Suggested Citation

Naz, Mehek and Siddiqui, Danish Ahmed, The Effect of Dividend Policy on Share Price Volatility in Pakistan (August 26, 2020). Available at SSRN: https://ssrn.com/abstract=3681292 or http://dx.doi.org/10.2139/ssrn.3681292

Mehek Naz

Karachi University Business School ( email )

Karachi
Pakistan

Danish Ahmed Siddiqui (Contact Author)

University of Karachi - Karachi University Business School ( email )

University Road
Karachi, Sindh 75270
Pakistan
3333485884 (Phone)

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