Does Dividend Stability Provide a Promising Stock Return? Evidence from Bursa Malaysia

Samad, M. Fazilah Abdul; Shaharudin, Roselee Shah; Ha, Seoktae

doi:10.2139/ssrn.1009187

Cited by 2 publications

(4 citation statements)

References 7 publications

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“…In other words, dividend policies statistically have no impact on stock price return for the 102 industrial companies listed on BIST Industrials Index (XUSIN) between 2004 and 2016. This result is in contrast with the studies of Sealy and Knight (1987), Nishat and Irfan (2004), Samad, Shaharudin and Ha (2007), Pani (2008), Kapoor (2009), Al Shabibi and Ramesh (2011), Hussainey, Oscar Mgbame and Chijoke-Mgbame (2011), and Ramadan (2013. On the other hand, this study provides us similar results as the studies of Black and Scholes (1974), Batchelor and Orakçıoğlu (2003), Pekkaya (2006), Konak and Kendirli (2013).…”

Section: Empirical Findingscontrasting

confidence: 74%

“…The study documents some irrationality in the responses to cash dividends, with prices rising/ falling after increased/ decreased dividend payments, rather than after the much earlier dividend announcements. Samad, Shaharudin and Ha (2007) investigated if there is a significant relationship between a stable dividend policy and firm performance in Malaysian stock market. They used data set of 120 firms from seven different sectors for the period 2001-2005.…”

Section: İşletme Araştırmaları Dergisimentioning

confidence: 99%

“…In order to investigate the effect of dividend policy on firm value, we used the annual change in stock prices as a proxy for firm value changes. Stock prices has been used mostly in literature as a dependent variable as in the studies of Black and Scholes (1974), Samad, Shaharudin and Ha (2007), Pani (2007), Kapoor (2009), Husseiney andOscar (2011). While calculating the annual return of stocks, the companies' year-end adjusted stock prices are used.…”

Section: Dependent Variablementioning

confidence: 99%

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The Effect of Dividend Policy on Stock Price: Evidence from An Emerging Country

Dereli¹,

Topak

2018

isarder

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This study attempts to explore the effect of dividend policy on the stock prices of the companies in Turkey. A balanced panel data set has been formed with 102 companies listed on Borsa Istanbul Industrial Index (XUSIN) for the period 2004-2016. The results of the models used in the study show no statistically significant effect of gross dividend payout ratio, cash dividend payout ratio and their one-year lagged values on stock prices. 1187 dividend policy that will maximize the firm value and will not have any negative effect on the future investment goals and the cash flow of the firm. For this reason, the way that the investors react to dividend distribution is crucial for the managers.Various theories have been put forward regarding the correlation between dividend yields and capital gains as well as the effect of dividend distribution on investor preferences. These theories are fundamentally divided into two main views. The first view holds that the dividend distribution is relevant, while the second view holds that it is not. Miller and Modigliani (1961) were the first to argue in their "Dividend Irrelevance Theory" that dividend policy does not affect the firm value. The Residual Dividend and Clientele Effect theories also suggest that dividend policies do not have an effect on the firm value. On the other hand, as a counterpoint to the dividend irrelevance theory, Bird in Hand theory (Lintner, 1962) constitutes the main theory of dividend relevance, with other theories such as Walter Model (1963), Signalling Theory (Bhattacharya, 1979), Tax Preference Theory (Litzenberger and Ramaswamy, 1979) and the Agency Theory (Rozeff, 1982) supporting it.Although there have been various studies conducted in the finance literature regarding the validity of both theories, no final result has been reached so far. In this studies that have been conducted, the results differ depending on the country that the business is located in, the sector of the business, the period of activity, the investor profile and the conjuncture. These results indicate that Fischer Black's statement (Black, 1976) "The harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don't fit together" is still valid.As a result of the firm value standing out as the ultimate goal of the companies, the study of the factors which affect the firm value still maintains its importance. In this study, we take stock price as an indicator of the firm value while we analyze the relations between firm value and dividend policy in the Turkish Capital Market.The structure of this paper is as follows: the introduction, the literature review, description of the data and the empirical methodology, findings of the econometric analysis, and the conclusion. Literature ReviewMany studies have been conducted in the past attempting to explain the relationship between dividend policy and stock prices. There are various studies which support that the dividend earnings have an effect on stock prices.The first study was introduced by M.J. G...

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Section: Empirical Findingscontrasting

confidence: 74%

Section: İşletme Araştırmaları Dergisimentioning

confidence: 99%

Section: Dependent Variablementioning

confidence: 99%

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The Effect of Dividend Policy on Stock Price: Evidence from An Emerging Country

Dereli¹,

Topak

2018

isarder

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“…The results showed that the measurements of the dividend policy, dividend yields and dividend payout, caused volatility in stock prices. Samad et al (2007) revealed that there is a significant relationship between a stable dividend policy and firm performance in Malaysian stock market. The study suggested that there was no significant impact of dividend policy on stock market return.…”

Section: Njiss Volumementioning

confidence: 99%

Dividends, earnings and stock prices: a case of Nepalese insurance companies

Lamichhane

Rai

2021

Nep. J. Insur. Soc. Sec.

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The study examines the relationship among dividends, earnings and stock prices of Nepalese insurance companies. Market price per share and stock return are the dependent variables. The independent variables are earning per share, dividend per share, dividend payout ratio, PE ratio, return on assets and return on equity. This study is based on secondary data of 15 insurance companies with 105 observations for the period of 2011/12 to 2017/18. The data were collected from the annual reports of the selected insurance companies. The regression models are estimated to test the significance and importance of dividends, earnings and stock prices in Nepalese insurance companies. The result shows that earning per share has a positive impact on market price per share and stock returns. It reveals that increase in earnings per share leads to increase in market price per share and stock returns. Similarly, PE ratio has a positive impact on market price per share and stock returns. It shows that increase in PE ratio leads to increase in market price per share and stock returns. Likewise, return on equity has a positive impact on market price per share and stock returns. Similarly, higher the return on equity, higher would be the market price per share and stock returns. The result also shows that dividend per share has a positive impact on market price per share. It indicates that increase in dividend per share leads to increase in market price per share. Similarly, dividend payout ratio has a positive impact on market price per share. It shows that increase in dividend payout ratio leads to increase in market price per share. Likewise, return on assets has a positive impact on stock return. It shows that higher the return on assets, higher would be the stock returns. However, dividend payout ratio has negative impact on stock return which reveals that higher the dividend payout ratio lower would be the stock return. Likewise, dividend per share has a negative impact on stock return which reveals that higher the dividend per share lower would be the stock return. Similarly, return on assets has negative impact on market price per share which reveals that higher the return on assets lower would be the market price per share.

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Does Dividend Stability Provide a Promising Stock Return? Evidence from Bursa Malaysia

Cited by 2 publications

References 7 publications

The Effect of Dividend Policy on Stock Price: Evidence from An Emerging Country

The Effect of Dividend Policy on Stock Price: Evidence from An Emerging Country

Dividends, earnings and stock prices: a case of Nepalese insurance companies

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