Abstract:
Purpose
The purpose of this study to identify the determinants of stock price volatility and the role of
dividend policy in it. The objective is to study the major reasons of price volatility and suggest
some ways to control it.
Methodology & Design
This study is based on secondary data and the research has been conducted on the commercial
banking sector in Pakistan Stock Exchange where the data of five years is being taken for testing
purpose. The data was gathered from banks’ yearly Financial Statements, Reports and through
internet.
Findings
The Results of the testing shows that dividend payments have significant impact on Price
volatility. On the other hand Asset Growth and Leverage and Size have very least impact on
Price Volatility.
Limitations
The study is based on Commercial banking sectors listed in Pakistan Stock Exchange, but
upcoming studies should focus on other sectors of the country or in other exchanges for better
understanding of different areas.
Recommendations
The results show that Dividend payments have significant impact on Price volatility and other
variables have minor impact on price volatility. Banks need to announce their information about
dividends payments dates at the start of year through statements or websites and secondly banks
should strive to maintain their growth in assets on yearly basis. Besides, banks also need to
maintain a balanced proportion of debt and the size of the firm to avoid price fluctuations.
