Dividend policy and stock price volatility: evidence from Bangladesh

Rashid, Afzalur and Rahman, A. Z. M. Anisur (2008) Dividend policy and stock price volatility: evidence from Bangladesh. Journal of Applied Business and Economics, 8 (4). pp. 71-81. ISSN 1499-691X

Abstract

Corporate dividend policy is mysterious and one of the puzzles in corporate finance. This study seeks to examine the relationship between dividend policy and stock price volatility. By using the cross-sectional regression analysis after controlling for earning volatility, payout ratio, debt, firm size and growth in assets, this paper identifies that there is an evidence of positive, but non-significant relationship between stock price volatility and dividend yield. An important implication of this study is that, the share price reaction to the earnings announcement is not similar to that of other developed countries. Therefore, the managers may not employ the dividend policy to influence their stock’s risk. The influence of stock price risk through dividend may be also ambiguous due to the inefficient capital market in Bangladesh. This paper contributes to reducing the dearth of studies on dividend and stock price volatility in emerging economies.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Author version not held.
Depositing User: Dr Afzalur Rashid
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 15 Dec 2010 09:17
Last Modified: 03 Jul 2013 00:07
Uncontrolled Keywords: dividend policy; stock volatility
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150299 Banking, Finance and Investment not elsewhere classified
14 Economics > 1402 Applied Economics > 140207 Financial Economics
Socio-Economic Objective (SEO2008): B Economic Development > 91 Economic Framework > 9102 Microeconomics > 910206 Market-Based Mechanisms
URI: http://eprints.usq.edu.au/id/eprint/9137

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