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Comparing Connection Between Stock Price & Dividend Policy In Public And Private Sector: Pakistan Evidence

Author

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  • AMIN, Muhammad

    (Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Karachi, Pakistan. Author-Name: ALVI, Jahanzaib
    IQRA University, Karachi, Pakistan)

  • REHAN, Muhammad

    (Institute of Social Sciences, Gaziosmanpasa University Tokat, Turkey.)

Abstract

The paper establishes if dividend policy is a trustworthy indicator for the investors to predict a company's future growth in value to maximize their returns on their portfolios. The analysis technique used is cross-sectional regression analysis since the research focuses on various companies with numerous variables under a period of ten years. The study was conducted several times, with all companies together. Private companies and then public companies, individually, to see if the dividend policy has the same impact on the stock prices for both types of corporations. The results show that although Dividend Pay-out Ratio itself doesn't have a relationship with the stock price, the Dividend Yield of the company has a significant relationship with Share Price. Mixed results have been witnessed in result of data analysis from control variables. Although Leverage showed a significant relationship with the dependent variable when all companies were assessed altogether, it did not show any significance individually when the connections were analysed separately within public and private companies. On the other hand, Growth did not establish a significant relationship with share price volatility in the complete result; it had a significant one in the private companies' works. The study supports the fact that dividend policy does not necessarily have significance in determining share price changes for a sample of firms listed on the Pakistan Stock Exchange.

Suggested Citation

  • AMIN, Muhammad & REHAN, Muhammad, 2021. "Comparing Connection Between Stock Price & Dividend Policy In Public And Private Sector: Pakistan Evidence," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 25(3), pages 56-70, September.
    • Handle: RePEc:vls:finstu:v:25:y:2021:i:3:p:56-70
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    References listed on IDEAS

    as
    1. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411-411.
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    More about this item

    Keywords

    share price volatility; debt-to-equity; pay-out-ratio; public company; private company Pages: 56-70;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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