| Title : | Dividend policy and its impact on share price: a study on Nepalese commercial banks | | Material Type: | printed text | | Authors: | Ankur Shrestha, Author | | Publication Date: | 2015 | | Pagination: | 91p. | | Size: | GRP/Thesis | | Accompanying material: | 4/B | | General note: | Including bibilography | | Languages : | English | | Descriptors: | Banks
Banks and banking
Commercial banks
Dividend policy
Dividends
Share_Price
| | Keywords: | 'dividend policy share price volatility banking dividends share' | | Class number: | 332.1 | | Abstract: | Dividend policy is a major financing decision that involves with the payment to shareholders in return of their investment. Every firm operating in a given industry follows some sort of dividend payment pattern or dividend policy and obviously it is a
financial indicator of the firm. Demand of the firm's share should to some extent, dependent on the firm's dividend policy. Dividend policy is one of the most widely researched topics in the field of finance but the question is whether dividend policy affects stock prices still remain debatable among managers, policy makers and researchers for many years. Dividend policy is important for investors, managers, lenders and for other stakeholders. It is important for investors because investors consider dividends not only the source of income but also a way to assess the firms from investment points of view.
Selecting a suitable dividend policy is an important decision for the bank because flexibility to invest in future projects depends on the amount of dividends that they pay to their shareholders. If company pay more dividends then fewer funds are available for investment in future projects. Lenders are also interested in the amount of dividend that a company declares, as more amounts is paid as dividend means less amount would be available to the company to pay off their obligation. This study attempts to investigate the impact of dividend policy on market price of the share of the commercial banks listed in the Nepal stock exchange.
This study is based on both primary and secondary sources of data. The primary data have been obtained by conducting questionnaire survey with investors. The secondary data have been collected from the supervision report of Nepal Rastra Bank, annual reports of commercial banks, different published articles, reports and books. Descriptive research design and causal comparative research design has been used to deal with issues associated with the dividend policy and share price. This study is based on pooled cross-sectional analysis of secondary data of 17 commercial banks with 102 observation for the period of 2008 to 2013. Market price of share and share price volatility are selected as the dependent variables for this study. Earnings per share, retained ratio, dividend payout ratio and dividend yield ratio are the explanatory variables. Return on equity, profit after tax, liquidity, growth of total assets, size of total assets and leverage are used as the control variables. The multiple regression models are applied to test the significance and impact of dividend policy on market price of the shares listed in the Nepal stock exchange.
The primary survey revealed that Nepalese commercial banks are paying dividend as per the desire of shareholders. But most of the respondents are not satisfied with the dividend payment by commercial banks. The majority of the respondents agree that dividend paying stocks offer more certainty about the company's future earnings prospects compared to stocks that do not pay dividends. The results of the survey revealed that the majority of the respondents prefer high dividend payout. Most of the respondents blamed government's investment policy for lack of development of Nepalese stock market. The primary survey also found that major reason for the respondent's investment in shares is the expectation of increased in market price. The survey revealed that most of the respondents agree that dividend payments are better signals of confidential information than other media forms; thus raising share value and payment of dividends is a demonstration that the firm is strong enough and can pass up profitable investments.
The study concluded that market price of the share is negatively related with retained ratio and liquidity. There is a positive relation of market price of the share with earnings per share, return on equity and profit after tax. The result shows that higher the earnings per share, higher would be the market price of the share. The result also indicates that lower the retained earnings, higher would be the market price of the share and lower the liquidity, higher would be the market price of the share.
The share price volatility is negatively related with dividend yield ratio and size of total assets. There is a positive relation of share price volatility with dividend payout ratio, leverage and growth of total assets. The result shows that lower the dividend payout ratio, lower would be the volatility of the share price and also lower the growth of total assets, lower would be the volatility of the share price.
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Dividend policy and its impact on share price: a study on Nepalese commercial banks [printed text] / Ankur Shrestha, Author . - 2015 . - 91p. ; GRP/Thesis + 4/B. Including bibilography Languages : English | Descriptors: | Banks
Banks and banking
Commercial banks
Dividend policy
Dividends
Share_Price
| | Keywords: | 'dividend policy share price volatility banking dividends share' | | Class number: | 332.1 | | Abstract: | Dividend policy is a major financing decision that involves with the payment to shareholders in return of their investment. Every firm operating in a given industry follows some sort of dividend payment pattern or dividend policy and obviously it is a
financial indicator of the firm. Demand of the firm's share should to some extent, dependent on the firm's dividend policy. Dividend policy is one of the most widely researched topics in the field of finance but the question is whether dividend policy affects stock prices still remain debatable among managers, policy makers and researchers for many years. Dividend policy is important for investors, managers, lenders and for other stakeholders. It is important for investors because investors consider dividends not only the source of income but also a way to assess the firms from investment points of view.
Selecting a suitable dividend policy is an important decision for the bank because flexibility to invest in future projects depends on the amount of dividends that they pay to their shareholders. If company pay more dividends then fewer funds are available for investment in future projects. Lenders are also interested in the amount of dividend that a company declares, as more amounts is paid as dividend means less amount would be available to the company to pay off their obligation. This study attempts to investigate the impact of dividend policy on market price of the share of the commercial banks listed in the Nepal stock exchange.
This study is based on both primary and secondary sources of data. The primary data have been obtained by conducting questionnaire survey with investors. The secondary data have been collected from the supervision report of Nepal Rastra Bank, annual reports of commercial banks, different published articles, reports and books. Descriptive research design and causal comparative research design has been used to deal with issues associated with the dividend policy and share price. This study is based on pooled cross-sectional analysis of secondary data of 17 commercial banks with 102 observation for the period of 2008 to 2013. Market price of share and share price volatility are selected as the dependent variables for this study. Earnings per share, retained ratio, dividend payout ratio and dividend yield ratio are the explanatory variables. Return on equity, profit after tax, liquidity, growth of total assets, size of total assets and leverage are used as the control variables. The multiple regression models are applied to test the significance and impact of dividend policy on market price of the shares listed in the Nepal stock exchange.
The primary survey revealed that Nepalese commercial banks are paying dividend as per the desire of shareholders. But most of the respondents are not satisfied with the dividend payment by commercial banks. The majority of the respondents agree that dividend paying stocks offer more certainty about the company's future earnings prospects compared to stocks that do not pay dividends. The results of the survey revealed that the majority of the respondents prefer high dividend payout. Most of the respondents blamed government's investment policy for lack of development of Nepalese stock market. The primary survey also found that major reason for the respondent's investment in shares is the expectation of increased in market price. The survey revealed that most of the respondents agree that dividend payments are better signals of confidential information than other media forms; thus raising share value and payment of dividends is a demonstration that the firm is strong enough and can pass up profitable investments.
The study concluded that market price of the share is negatively related with retained ratio and liquidity. There is a positive relation of market price of the share with earnings per share, return on equity and profit after tax. The result shows that higher the earnings per share, higher would be the market price of the share. The result also indicates that lower the retained earnings, higher would be the market price of the share and lower the liquidity, higher would be the market price of the share.
The share price volatility is negatively related with dividend yield ratio and size of total assets. There is a positive relation of share price volatility with dividend payout ratio, leverage and growth of total assets. The result shows that lower the dividend payout ratio, lower would be the volatility of the share price and also lower the growth of total assets, lower would be the volatility of the share price.
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