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Cash Dividend Disbursement, Retained Earnings and Their Impact on Stock Price Volatility: A Case of Selected Non-Financial Firms of Pakistan

Author

Listed:
  • Shaheen, Adil
  • Yasser, Farah
  • Ashraf, Kinza

Abstract

The prime objective of the current study is to determine the relationship between corporate dividend policy and retained earnings and its impact on stock price volatility. The impact of corporate dividend policy and retained earnings on stock price volatility has been debated and discussed variously over the course of the last five decades. Past researches showed mixed evidences of this relationship and the results +remained inconclusive. Moreover, in this regard, only a few studies have been conducted in Pakistan. So, it remains undecided whether the relationship exists or not and further study is required to establish or refute its existence. For this purpose, modern statistical techniques and tools available for analyzing the data were used. Data from a total of 75 companies was initially collected and scrutinized according to different parameters mentioned in the study. Only 50 companies from year 2010 to 2018 were left to be analyzed as the data was not wholly available for the remaining companies as per research requirement. Two separate models were run and the results determined that there exists a positive relationship of corporate dividend policy and retained earnings with stock price volatility.

Suggested Citation

  • Shaheen, Adil & Yasser, Farah & Ashraf, Kinza, 2022. "Cash Dividend Disbursement, Retained Earnings and Their Impact on Stock Price Volatility: A Case of Selected Non-Financial Firms of Pakistan," Audit and Accounting Review, University of Management and Technology, Lahore, Pakistan, vol. 2(1), pages 1-24.
    • Handle: RePEc:ris:aarumt:2389
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