IMPACT OF DIVIDEND POLICY ON STOCK PRICE

Abstract

Purpose To examine the relationship between dividend policy and stock price in cement sector of Pakistan. Design/methodology/approach - Descriptive analysis, regression analysis and correlation analysis has been used to explore the impact and relationship between stock price and dividend policy. For this study 3 cement companies of Sindh have been studied out of 5 cement sector companies of Sindh listed at KSE for the period of 2008-2017. Findings The main objective of this study is to find out the impact of dividend policy on stock price. The empirical findings suggest that there is significant negative relationship between stock price and dividend yield, and insignificant negative relationship between dividend payout ratio. The study have significant positive relationship between stock price and dividend per share. The overall findings of the study have two more dependent variable i.e. stock turnover and stock volume their findings shows insignificance relationship with the dependent variables except the one variable show significance i.e. dividend per share as independent and stock turnover as independent. The results of the hypothesis testing may act as information provider to the investors and the management of the company who want to invest in the cement sector of Pakistan. Practical implications - The study suggest that dividend policy is important in determining the stock price volatility in cement sector of Pakistan, hence is helpful to both managers and investors.