Dividend Policy and Stock Return: A Study on Some Select Stock in Indian Stock Market
Keywords:
Correlation, dividend per share, earning per share, earning retention ratioAbstract
Dividend is that portion of profits of a company which is distributable among its shareholders according to the decision taken and resolution passed in the meeting of Board of Directors. Dividend policy ploys an important role for maintaining good image of company in the capital market and in providing source of low cost finance for financing for the profitable future investment proposals. Objective of the study is to calculate the three measures of (dividend per share, earning per shore, earning retention ratio) dividend policy of the five selected compa nies Hero Motor Corporation Limited, Tide water oil company, orocle financial services software limited, lndiabulls housing finance limited and Vedanta limited and correlate the factors of dividend policy and return on share price for a period of five years. It was found from the study that only in case of lndiobulls housing finance limited DPS, EPS, ERR and ROS are positively related. So it can be said that only in case of lndiabulls housing finance limited company factors of dividend policy are positively related with ROS.
References
Amihud, Y. & Li, K (2002). The Declining Information ContentofDividendAnnouncementand the Effect of Institutional Holding. Working Paper, Stern School of Business, New York University.
Ali, F. & Recep, B. (2012). Yes, dividends are disappearing: Worldwide evidence.Journal of Banking& Finance. 36(3), pp. 662- 667
Adelegan, O.J. (2008). Can a Regional Approach Accelerllle Stock Market Development? Empirical Evidence from Sub-Saharan Africa. IMF Working Paper 08/281, Washington: International Monitory Fund.
Adelegan, O.J. (2009). Price Reactions to Dividend Announcements on the Nige111m Stock Market. AERC Research Paper 188, African Economic Research Consortium, Nairobi.
Al-Hares, 0., Abu-Ghazaleh, N. & Haddad, A. (2012). Value relevance of earnings, book value and dividends in an emerging capital market: Kuwait evidence. 23(3), 221-234
Asem, E. (2009). Dividends and Price Momentum. Journal of Banking & Finance. 33(3), pp. 486-494.
Asem, E. & Tian, G. Y. (2010). Market Dynamics and Momentum Profits.journal of Financial and Quantitative Analysis, 45(6), 1549-62.
Braouezec, Y. & Lehalle, A. (2010). Corporate Liquidity, Dividend Policy and Default Risk: Optimal Financial Policy and Agency Costs. International Journal of Theoretical and Applied Finance. 13(4), 537-576. The Effect of Dividend Policy on Share Price: An Evaluative Study www.iosrjournals.org 11 I Page
Brandit, L.K (1996). Analysis for Financial Management. Englewood Cliffs N .J .: Prentice Hall. 10. Gordon, M. J. (1962). The Investment, Financing, and Valuation of the Corporation Homewood. Illinois: Irwin Publishers.
Henne, A., Ostrowski, S. & Reichling, P. (2007). Dividend Yield and Stability versus Performance at the German Stock Market. Faculty of Economics and Management in its series. 14th Annual Meeting of the German Finance Association, Dresden, Sept. 29th.
Hashemijoo, M., Ardekani, A.M. & Younesi, N. (2012). The Impact of Dividend Policy on Share Price Volatility in the Malaysian Stock Market. Journal of Business Studies Quarterly, 4(1), pp. 119-129.
Igan, D., Paula, A. & Pinheiro, M. (2010). Liquidity and Dividend Policy. MPRA Paper with number 29409, University Library of Munich, Germany.
Jais, M., Karim, B. A., Funaoka, K & Abidin, A. Z. (2009). Dividend Announcements and Stock Market Reaction. University Library of Munich, Germany in its series MPRA Paper with number 19779, Posted 12.
Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. the Journal of Business, 34(4), 411- 433.
Murhadi, WR. (2008). Study on Dividend Policy: Antecedent and Its Impact on Share Price. Journal of Manajemen & Kewirausahaan, 9(1), 1-29
Naser, K., Nuseibeh, R. & Rashed, W (2013). Managers 'perception of dividend policy: Evidence from companies listed on Abu Dhabi Securities Exchange. Issues in Business Management and Economics, 1 ( 1), 01-12
Suleman, M., Asghar, M., Ali Shah, S., & Hamid, K (2011). Impact of Dividend Policy on Stock Price Risk: Empirical Evidence from Equiry Market of Pakistan.
Uwuigbe, U., Jafaru, J. & Ajayi, A. (2012). Dividend Policy and Firm Performance: A Study of Listed Firms in Nigeria. Journal of Accounting and Management Information Systems.11 (3), 442-454
Van Horne,J.C. (1979). Optimallnitation of Bankruptcy by Debt Holders, The Journal of Finance, 31(3), pp. 897-910.
Walter, P. ( 1970). How to Calculate Savingf Possible Through Reduction ofWorki11g Capital Financial .Executive, pp.50-58.
Weston, J.F. & Brigham, E.F. (1972). Managerial Finance. 4th Edn., NY: Holt, Rinehart &
