| Title : | Dividend policy and share price volatility: evidence from Nepalese commercial banks | | Material Type: | printed text | | Authors: | Rakhi Jha, Author | | Publication Date: | 2014 | | Pagination: | 80p. | | Size: | GRP/Thesis | | Accompanying material: | 2/B | | General note: | Including Bibliography | | Languages : | English | | Descriptors: | Banks and banking
Dividend policy
Dividends
Share-Price
| | Keywords: | 'dividend policy share price volatility banking dividends share' | | Class number: | 650 | | Abstract: | The study on dividend policy and share price volatility: evidence from Nepalese commercial banks provides an important insight into the understanding of share price behavior in Nepal stock market. This study basically aimed at examining the volatility in share price with respect to banks specific variables and also attempted to evaluate
the causal relationship between dividend policy and share price volatility in Nepalese
stock market. The main purpose of this study is to know relationship between share
price volatility and dividend yield, dividend payout, capital, earnings, asset quality,
net interest margin, investment, size, debt, return on equity and return on assets.
However, the specific objectives of the study are: (a) to analyze whether the current
dividend policy should be maintained or changed, (b) to examine the investor‟s
preference towards dividend payment, (c) to analyze the uniformity with regards to
behaviors in dividend distribution of Nepalese Commercial banks, (d) to analyze the
relationship between dividend and market price of share, (e) to identify the
relationship between price volatility and financial performance of Nepalese
commercial banks, (f) to examine the effects of bank specific variables on price
volatility. The proposed study could be used by researchers, policy makers, and
mangers to examine and understand share price volatility and dividend policy in
Nepalese context.
The sample was selected through purposive sampling method. A structured, self
administered questionnaire was used to collect data from the respondents. Descriptive
statistics including frequencies, percentages, mean and standard deviation were used
to describe variable characteristics while inferential statistics (correlation and
regression) were used to determine and explain variable relationships. The multiple
regression models are used to check the relationship between dependent and
independent variables. This study employs panel data techniques to measure the
relation between price volatility with dividend yield, dividend payout, capital, size,
net interest margin, investment, debt, return on assets, return on equity and earnings
volatility for a sample of 20 commercial banks for the period of 2007-2011. For this
we are selecting 20 commercial banks of Nepal containing 100 observations.
VIII
The study results showed that price volatility is positively correlated with dividend
payout, size of the firm, investment, return on assets and return on equity whereas,
negatively correlated with dividend yield, capital, net interest margin, and debt and
earnings volatility. The coefficient of dividend yield and size is positive with price
volatility. The coefficient of dividend payout, capital, net interest margin, investment,
debt, return on assets, and return on equity and earnings volatility is negative with
price volatility. Further this study found that stable dividend policies should be
followed by the commercial banks. If the company has no cash to pay dividends then
company should pay stock dividends. Hence, current trading price of shares in the
market is moderate. Lack of buying and selling behavior of investors is responsible
for the lack of development of Nepalese stock market. On the basis of earnings
dividend declaring firms have more shareholders and their share value is high. On the
basis of financial performance firm should not pay dividends if profitable
investments. Stable dividend at present level is recommended for Nepalese
commercial banks. Share prices are more volatile (volatile: ups and downs) than
expected dividends.
In sum up, the major findings of this study can add value to the existing literature. It
may help decision makers at bank to focus on major banking activities that may
increase the stock price or may decrease the stock price volatility with other
competitive banks. This may also help management of commercial bank in creating
appropriate strategies for attaining the least share price volatility in Nepalese stock
market. |
Dividend policy and share price volatility: evidence from Nepalese commercial banks [printed text] / Rakhi Jha, Author . - 2014 . - 80p. ; GRP/Thesis + 2/B. Including Bibliography Languages : English | Descriptors: | Banks and banking
Dividend policy
Dividends
Share-Price
| | Keywords: | 'dividend policy share price volatility banking dividends share' | | Class number: | 650 | | Abstract: | The study on dividend policy and share price volatility: evidence from Nepalese commercial banks provides an important insight into the understanding of share price behavior in Nepal stock market. This study basically aimed at examining the volatility in share price with respect to banks specific variables and also attempted to evaluate
the causal relationship between dividend policy and share price volatility in Nepalese
stock market. The main purpose of this study is to know relationship between share
price volatility and dividend yield, dividend payout, capital, earnings, asset quality,
net interest margin, investment, size, debt, return on equity and return on assets.
However, the specific objectives of the study are: (a) to analyze whether the current
dividend policy should be maintained or changed, (b) to examine the investor‟s
preference towards dividend payment, (c) to analyze the uniformity with regards to
behaviors in dividend distribution of Nepalese Commercial banks, (d) to analyze the
relationship between dividend and market price of share, (e) to identify the
relationship between price volatility and financial performance of Nepalese
commercial banks, (f) to examine the effects of bank specific variables on price
volatility. The proposed study could be used by researchers, policy makers, and
mangers to examine and understand share price volatility and dividend policy in
Nepalese context.
The sample was selected through purposive sampling method. A structured, self
administered questionnaire was used to collect data from the respondents. Descriptive
statistics including frequencies, percentages, mean and standard deviation were used
to describe variable characteristics while inferential statistics (correlation and
regression) were used to determine and explain variable relationships. The multiple
regression models are used to check the relationship between dependent and
independent variables. This study employs panel data techniques to measure the
relation between price volatility with dividend yield, dividend payout, capital, size,
net interest margin, investment, debt, return on assets, return on equity and earnings
volatility for a sample of 20 commercial banks for the period of 2007-2011. For this
we are selecting 20 commercial banks of Nepal containing 100 observations.
VIII
The study results showed that price volatility is positively correlated with dividend
payout, size of the firm, investment, return on assets and return on equity whereas,
negatively correlated with dividend yield, capital, net interest margin, and debt and
earnings volatility. The coefficient of dividend yield and size is positive with price
volatility. The coefficient of dividend payout, capital, net interest margin, investment,
debt, return on assets, and return on equity and earnings volatility is negative with
price volatility. Further this study found that stable dividend policies should be
followed by the commercial banks. If the company has no cash to pay dividends then
company should pay stock dividends. Hence, current trading price of shares in the
market is moderate. Lack of buying and selling behavior of investors is responsible
for the lack of development of Nepalese stock market. On the basis of earnings
dividend declaring firms have more shareholders and their share value is high. On the
basis of financial performance firm should not pay dividends if profitable
investments. Stable dividend at present level is recommended for Nepalese
commercial banks. Share prices are more volatile (volatile: ups and downs) than
expected dividends.
In sum up, the major findings of this study can add value to the existing literature. It
may help decision makers at bank to focus on major banking activities that may
increase the stock price or may decrease the stock price volatility with other
competitive banks. This may also help management of commercial bank in creating
appropriate strategies for attaining the least share price volatility in Nepalese stock
market. |
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