Open AccessEffect of Dividend Policy Decision on Share Price Volatility (SPV) of Modaraba Companies Listed in Pakistan Stock Exchange (PSX)
Author(s) -
Muhammad Siddique
Publication year - 2020
Publication title -
jisr management and social sciences and economics
Language(s) - English
Resource type - Journals
eISSN - 2616-7476
pISSN - 1998-4162
DOI - 10.31384/jisrmsse/2020.18.2.11
Subject(s) - stock exchange , dividend policy , volatility (finance) , share price , economics , dividend , financial economics , econometrics , monetary economics , leverage (statistics) , panel data , dividend yield , finance , machine learning , computer science
This study aims to test the relationship between dividend policy decisions on the share price Volatility of Modaraba Companies quoted in the Pakistan stock exchange. The data for empirical analysis was collected from the Pakistan stock exchange, Recorder archive, and Ksestocks.com. By using the sampling technique, a sample of 19 Modaraba Companies was taken from 2010 to 2018. The empirical analysis was conducted using multiple regression techniques by employing a fixed effect model on panel data. This study also incorporated four control variables (size, growth, operating earning & level of debt) in empirical analysis to avoid multicollinearity problems between dividend policy measures and spurious regression. The results of the study validate the theory of relevance of dividend policy decisions on share price Volatility. Dividend policy has a negative and significant bearing on Stock price volatility. Higher leverage (debt level) leads to higher instability in stock prices. Firm earning volatility is positively associated with share price volatility. Firm size and firm's growth in terms of assets also has a negative but insignificant impact on share price Volatility