Dividend policy and stock price volatility: evidence from Bangladesh

Article

Rashid, Afzalur and Rahman, A. Z. M. Anisur. 2008. "Dividend policy and stock price volatility: evidence from Bangladesh." Journal of Applied Business and Economics. 8 (4), pp. 71-81.
Article Title

Dividend policy and stock price volatility: evidence from Bangladesh

ERA Journal ID18562
Article CategoryArticle
AuthorsRashid, Afzalur (Author) and Rahman, A. Z. M. Anisur (Author)
Journal TitleJournal of Applied Business and Economics
Journal Citation8 (4), pp. 71-81
Number of Pages11
Year2008
Place of PublicationFlorida, United States
ISSN1499-691X
Web Address (URL)http://www.na-businesspress.com/JABE/RashidWeb.pdf
Abstract

Corporate dividend policy is mysterious and one of the puzzles in corporate finance. This study seeks to examine the relationship between dividend policy and stock price volatility. By using the cross-sectional regression analysis after controlling for earning volatility, payout ratio, debt, firm size and growth in assets, this paper identifies that there is an evidence of positive, but non-significant relationship between stock price volatility and dividend yield. An important implication of this study is that, the share price reaction to the earnings announcement is not similar to that of other developed countries. Therefore, the managers may not employ the dividend policy to influence their stock’s risk. The influence of stock price risk through dividend may be also ambiguous due to the inefficient capital market in Bangladesh. This paper contributes to reducing the dearth of studies on dividend and stock price volatility in emerging economies.

Keywordsdividend policy; stock volatility
ANZSRC Field of Research 2020350208. Investment and risk management
350299. Banking, finance and investment not elsewhere classified
380107. Financial economics
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Byline AffiliationsAbu Dhabi University, United Arab Emirates
University of Dhaka, Bangladesh
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