CORPORATE DIVIDEND POLICY AND SHARE PRICE VOLATILITY:A STUDY OF THE BOMBAY STOCK EXCHANGE

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Vijayakumar, Arvind (2012) CORPORATE DIVIDEND POLICY AND SHARE PRICE VOLATILITY:A STUDY OF THE BOMBAY STOCK EXCHANGE. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

Purpose: The research paper aims to identify the empirical relationship between Corporate Dividend policy in India and share price volatility.

Design/Methodology/Approach: A sample of 197 dividend paying companies listed on the Bombay stock exchange (BSE 500) was examined from 2006 to 2010.A panel data approach was applied to identify the relationship between price volatility against dividend yield and dividend payout ratio.

Findings: The findings observe a significant relationship between dividend policy and price volatility. In addition, growth and market value was significant, implying that larger companies with consistent growth generate stable rate of dividend. An industry wise analysis reveals that dividend policy is significant to explain price volatility. Variations in results are attributed to wealth concentration in the banking sector and a fragmented regulatory system.

Originality/value: Corporate dividend policy has been a subject of debate for over 4 decades on the relevance and irrelevance, yet it has not resolved the dividend puzzle. The relationship between dividend policy and price volatility has been extensively researched in the developed markets, however few studies have developed in India to explain the relationship between corporate dividend policy and share price volatility. This paper attempts to fill the research gap in the existing literature focussing on the effect of dividend policy on price volatility in India.

Key words: Dividend Policy, Price Volatility, Panel data

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 08 Apr 2013 11:50
Last Modified: 19 Oct 2017 20:43
URI: https://eprints.nottingham.ac.uk/id/eprint/25574

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