| Title : | The effect of dividend bubble on share price: a case of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Sujan Marahatta, Author | | Publication Date: | 2016 | | Pagination: | 78p. | | Size: | GRP/Thesis | | Accompanying material: | 7/B | | Languages : | English | | Descriptors: | Share-Price
| | Class number: | 332.632 | | Abstract: | Dividend policy can be defined as the policy which determine how much company will pay to shareholders and how much will be retained for future development. It consists of two parts distribution of returns among shareholders and reinvestment of retention for new opportunities. Dividend policy determines the division of earnings between payments to stockholders and reinvestment in the firm (Weston, Copeland, & Shatri, 2004). According to Miller and Modigliani (1961), dividends are irrelaevant given the perfect market condition. It imples that shareholders are indifferent between amount distributed and retained in the firm. However, in practice, the assumption of capital market perfection does not exist that lead to the situation where dividend policy is relevant. One school of thought advanced by Miller and Modigliani (1961), referred to as the "dividend irrelevance theory" believes that dividend is irrelevant and has no effect on the valuation of the firm. They viewed that the value of firm depends solely on its earnings power and is not influenced by the manner in which its earnings are split between dividends and retained earnings.
The main purpose of the study is to examine the effect of dividend bubble on market price of shares of Nepalese commercial bank. The specific objectives of the study are as follows: (i) to examine the structure and pattern of earnings per share, return on equity, return on assets, dividend payout, dividend yield, market price per share, size, Leverage. (ii) to determine the major factors affecting dividend payouts in banking enterprises.(iii) to investigate how dividend policy affect market price per share. (iv) to analyze the relationship between dividend payout and market value of share.
The study is based on the secondary data which were gathered for 14 Nepalese commercial banks, leading to a total of 112 observations. These data are collected for the period of 2007 to 2014. This study employs descriptive and causal comparative research design which deals with earnings per share, return on equity, return on assets, leverage, size, dividend payout, dividend yield, dividend per share, market price per share in the Nepalese commercial banks. The secondary data have been obtained from various issues of Banking and Financial Statistics, Bank Supervision Report published by Nepal Rastra Bank and annual reports of selected banks.
The study shows that average market price per share is largest for SCB i.e. Rs. 3582.13 and lowest for SRBL i.e. Rs. 183.06. It has been found that market price per share has decreased in majority of the selected commercial banks. Average dividend per share is highest for SCBL i.e. Rs. 80.19 and lowest for LBL i.e. Rs. 4.5. It may be seen that dividend per share has decreased in majority of the selected commercial banks. Average dividend yield is largest for PCBL 4.62 percent and lowest for EBL 1.27 percent. It found that dividend yield has decreased in the majority of the selected commercial banks.
The study revealed that earning per share, return on equity, return on assets, dividend payout, leverage and size have positive relationship with market price per share Similarly, earning per share, return on equity, return on assets, dividend payout, leverage and size are positively related to dividend per share. The result shows that dividend payout, leverage and size are positively related to dividend yield. However, earning per share, return on equity and return on assets have negative relationship with dividend yield.
The study reveals that there is positive significant relation among market price per share and earning per share, return on equity, return on asset, dividend payout, leverage and size. Likewise, there is positive significant relation with dividend per share and earning per share, return on equity, return on asset, dividend payout and size. Similarly, there is positive significant relation with dividend yield and size, leverage. However, result shows that earning per share has negative significant impact on dividend yield.
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The effect of dividend bubble on share price: a case of Nepalese commercial banks [printed text] / Sujan Marahatta, Author . - 2016 . - 78p. ; GRP/Thesis + 7/B. Languages : English | Descriptors: | Share-Price
| | Class number: | 332.632 | | Abstract: | Dividend policy can be defined as the policy which determine how much company will pay to shareholders and how much will be retained for future development. It consists of two parts distribution of returns among shareholders and reinvestment of retention for new opportunities. Dividend policy determines the division of earnings between payments to stockholders and reinvestment in the firm (Weston, Copeland, & Shatri, 2004). According to Miller and Modigliani (1961), dividends are irrelaevant given the perfect market condition. It imples that shareholders are indifferent between amount distributed and retained in the firm. However, in practice, the assumption of capital market perfection does not exist that lead to the situation where dividend policy is relevant. One school of thought advanced by Miller and Modigliani (1961), referred to as the "dividend irrelevance theory" believes that dividend is irrelevant and has no effect on the valuation of the firm. They viewed that the value of firm depends solely on its earnings power and is not influenced by the manner in which its earnings are split between dividends and retained earnings.
The main purpose of the study is to examine the effect of dividend bubble on market price of shares of Nepalese commercial bank. The specific objectives of the study are as follows: (i) to examine the structure and pattern of earnings per share, return on equity, return on assets, dividend payout, dividend yield, market price per share, size, Leverage. (ii) to determine the major factors affecting dividend payouts in banking enterprises.(iii) to investigate how dividend policy affect market price per share. (iv) to analyze the relationship between dividend payout and market value of share.
The study is based on the secondary data which were gathered for 14 Nepalese commercial banks, leading to a total of 112 observations. These data are collected for the period of 2007 to 2014. This study employs descriptive and causal comparative research design which deals with earnings per share, return on equity, return on assets, leverage, size, dividend payout, dividend yield, dividend per share, market price per share in the Nepalese commercial banks. The secondary data have been obtained from various issues of Banking and Financial Statistics, Bank Supervision Report published by Nepal Rastra Bank and annual reports of selected banks.
The study shows that average market price per share is largest for SCB i.e. Rs. 3582.13 and lowest for SRBL i.e. Rs. 183.06. It has been found that market price per share has decreased in majority of the selected commercial banks. Average dividend per share is highest for SCBL i.e. Rs. 80.19 and lowest for LBL i.e. Rs. 4.5. It may be seen that dividend per share has decreased in majority of the selected commercial banks. Average dividend yield is largest for PCBL 4.62 percent and lowest for EBL 1.27 percent. It found that dividend yield has decreased in the majority of the selected commercial banks.
The study revealed that earning per share, return on equity, return on assets, dividend payout, leverage and size have positive relationship with market price per share Similarly, earning per share, return on equity, return on assets, dividend payout, leverage and size are positively related to dividend per share. The result shows that dividend payout, leverage and size are positively related to dividend yield. However, earning per share, return on equity and return on assets have negative relationship with dividend yield.
The study reveals that there is positive significant relation among market price per share and earning per share, return on equity, return on asset, dividend payout, leverage and size. Likewise, there is positive significant relation with dividend per share and earning per share, return on equity, return on asset, dividend payout and size. Similarly, there is positive significant relation with dividend yield and size, leverage. However, result shows that earning per share has negative significant impact on dividend yield.
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