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Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices

Author

Listed:
  • Ahmed Imran Hunjra

    (UIMS-PMAS-University of Arid Agriculture Rawalpindi, Pakistan)

  • Muhammad Shahzad

    (UIMS-PMAS-University of Arid Agriculture Rawalpindi, Pakistan)

  • Muhammad Irfan Chani

    (National College of Business Administration and Economics, Pakistan)

  • Sabih ul Hassan

    (UIMS-PMAS-University of Arid Agriculture Rawalpindi, Pakistan)

  • Umer Mustafa

    (UIMS-PMAS-University of Arid Agriculture Rawalpindi, Pakistan)

Abstract

The volatility in stock prices is one of the most discussed topics in finance. Many studies have been conducted to find the factors which cause fluctuation in stock prices and different results have been found. In this study an attempt has been made to see the affect of dividend yield, dividend payout ratio, return on equity, earning per share and profit after tax on stock prices in Pakistan. For this purpose four non financial sectors (Sugar, Chemical, Food and personal care, Energy) have been selected. A sample of 63 companies listed at Karachi stock exchange was analyzed for the period of 2006-2011. Ordinary least square regression model has been applied on panel data. The results indicate dividend yield and dividend payout ratio which are both measures of dividend policy have significant impact on stock price. Dividend yield is negatively related with stock price and dividend payout ratio is positively related with stock price which means that these results are against dividend irrelevance theory. For other independent variables profit after tax and earnings per share have significant positive impact on stock price and return on equity which shows positive insignificant impact on stock price. This paper shows new insights for policy makers to improve the performance of Karachi stock exchange.

Suggested Citation

  • Ahmed Imran Hunjra & Muhammad Shahzad & Muhammad Irfan Chani & Sabih ul Hassan & Umer Mustafa, 2014. "Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(3), pages 109-115, March.
    • Handle: RePEc:ijr:journl:v:2:y:2014:i:3:p:109-115
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    Cited by:

    1. Anatol MELEGA & Vasilica - Monica ANCUÈšA (ARSENE), 2020. "Analysis Of The Result Of The Financial Year And Of The Earnings Per Share," European Journal of Accounting, Finance & Business, "Stefan cel Mare" University of Suceava, Romania - Faculty of Economics and Public Administration, West University of Timisoara, Romania - Faculty of Economics and Business Administration, vol. 14(24), pages 96-109, October.
    2. Mustafa Cayir & Nasuh Oguzhan Altay, 2021. "Direct and Indirect Effects of Cash Dividend Policies on Firms’ Capital Accumulation in Selected Developed Markets," Istanbul Business Research, Istanbul University Business School, vol. 50(2), pages 235-254, November.
    3. Tharinee Pongsupatt & Apichat Pongsupatt, 2019. "Factors Affecting Stock Price: The Case of Thailand Stock Exchange SET 100 Index," Proceedings of International Academic Conferences 9711711, International Institute of Social and Economic Sciences.
    4. Nurul Hidayah & Wahyudin Zarkasyi, 2017. "The Effect of Human Resources Management Competency and the Role of Culture on Accrual Accounting Implementation Effectiveness and the Impact on Quality of Accounting Information," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 183-199.
    5. Pusvita Yuana, 2023. "The impact of corporate social responsibility, corporate value, and profitability on the share prices of Sri Kehati Index Companies from 2016 to 2020," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(7), pages 254-262, October.
    6. Krishnamoorthy Charith & Andrey Davydenko, 2021. "Informational Value of Dividend Initiations: Impact of Cash Dividends on Share Prices of Manufacturing Companies in Sri Lanka," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(3), pages 1-13, March.
    7. Pudji Astuty, 2017. "The Influence of Fundamental Factors and Systematic Risk to Stock Prices on Companies Listed in the Indonesian Stock Exchange," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 230-240.
    8. Dama, Hais, 2018. "The Influence of the Dividend Payout Ratio (Dpr) and the Current Ratio (Cr) Against the Growth of Share Prices in the Service Sector Companies the Period 2011 – 215, in Indonesia," INA-Rxiv 63vhe, Center for Open Science.
    9. Andrey Davydenko & Krishnamoorthy Charith, 2021. "Informationswert von Dividendenausschüttungen: Einfluss von Bardividenden auf die Aktienkurse von produzierenden Unternehmen in Sri Lanka [Informational value of dividend initiations: Impact of cash dividends on share prices of manufacturing compa," Post-Print hal-03359177, HAL.
    10. Senjuti Barua, 2020. "Firm Level Characteristics and Stock Returns: Evidence from Selected Insurance Companies Listed on the Dhaka Stock Exchange," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(12), pages 1356-1365, December.
    11. Md. Yousuf Ahammed & Md. Ariful Haque Chowdhury & Md. Tahidur Rahman & Shayla Tazminur, 2024. "Financial Indicators Shaping Share Price Movement: Insight from the Dhaka Stock Exchange SME Board," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 267-272, October.

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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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