Panel Data Study of Dividend Policy Effect on Firms’ Value: Study on Manufacturing Sector of Bangladesh
##plugins.themes.bootstrap3.article.main##
Abstract
The impact of dividend on market price of share is a controversial issue. To solve this issue in
our market perspective, this study is done whether there is impact of DPR on PE or not. The panel
data analysis (FE and RE model) is used to find out the impact of dividend on market price. The
study is conducted on manufacturing sector and is found that the DPR has impact on PE. There
is other co factors (age of the firm), which also have impact on PE. So, the findings support the
relevance theory of dividend on shareholders’ wealth. This finding will help the dividend decision
makers and investors for taking corrective dividend decision.
References
•Ahsan Habib. (2004), Do Dividends Signal the Future: Empirical evidence from Bangladesh, Journal of Business Administration,30(1-2), n.d.
• Brennan, M. J. (1970), Taxes, Market Valuation and Corporate Financial Policy, National Tax Journal, 23,417- 427.
• Brigham, Eugene F. and Michael C. Ehrhardi (2003), Financial Management: Theory and Practice, ed.10th, Ohio, USA, Thomson South-Western.
• Brealey, R. A., S. C. Mayers, and Allrn, F. (2006), Corporate Finance, 8th Edition, N.Y: McGraw-Hill Irwin.
• Black, F. and Scholes, M. (1974), The Effect of Dividend Yield and Dividend Policy on Common Stock Prices and Returns, Journal of Financial Economics, 1, 1-22.
• Bhattacharya, S.(1979),”Imperfect Information, Dividend Policy, and ‘the bird in the hand Fallacy”, The Bell Journal of Economics, 10, 1, 259-270.
• De Angelo, H. (1991), Payout Policy and Tax Deferral, The Journal of Finance, LXVI, (1), March, 357-368.
• Fama, E. F. &Babiak, H. (1968),Dividend Policy: An Empirical Analysis, Journal of the American Statistical Association, 1132-1161.
• Fudenberg, D. and Tirole, J. (1995), Game Theory, Massachusetts Institute of Technology.
• Gordon, M. J. (1962), Optimal Investments and Financing Policy, Review of Economics and Statistics, 37- 51.
• Hussain, F. (1999), The Day of the Week Effect in the Pakistani Equity Market: An Investigation”, The Lahore Journal of Economics, 5, 93- 98.
• James .C Van Horne & John M. Wachowicz, Jr. (2006), Financial Management, 12th ed., prentice hall, England.
• Jahur, M. S. and Nazneen, S. (2005), Determinants of Dividend Policy – An Empirical Study of Some Selected Corporate Sector in Bangladesh, The Cost and Management, 33(6), 58-68.
• Jensen, M. C., and William H. M. (1976), “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership structure, Journal of Financial Economics, 3, 305-360.
• Lintner, J. (1956), Distribution of Incomes of Corporations, American Economic Review, 46, 97-133.
• Miller, M. H. & Modigliani, F. (1961), Dividend Policy, Growth and Valuation of Shares, The Journal of Business, 24, 411-433.
• Parua, Anupam and Gupta, A. (2009), Dividend History and determinants in selected Indian companies: a study during 1993-94 to 2004-05, Australian Accounting Business and Finance Journal, 3(4), n.d.
• Porterfield, J. T. S. (1959),”Dividend, Dilution, and Delusion”, Harvard Business Review, 37, 56-61.
• Rao, R.K.S and White, S.A. (1994), The dividend payouts of private firms: Evidence from tax court decisions”, Journal of Financial Research, 17(4), 449-464.
• Shapiro, Alan C. (1990). Modern Corporate Finance. New York: Macmillan Publishing Co.
• Stevens, J. L. and Jose, M. L.(1992). The Effect of Dividend Payout, Stability, and Smoothing on Firm Value, Journal of Accounting Auditing & Finance, 7, 195-216.
• Stacescus, B. (2006). Dividends Revisited: An In-depth Look at the Relationship Between Dividends and Earnings. Working Paper, University of Zurich.
• Shahiduzzaman, M. and Naser,M. (2006). Volatility in the Overnight Money-Market Rate in Bangladesh: Recent Experiences. Bangladesh Bank Quarterly, 4 (2).
• Stata Corp. (2003). Stata Statistical Software: Release 8.0, (Stata Corporation, College Station, Texas).
• Travlos, N., Murinde,V. and Naser,K. (2002). Dividend Policy of Companies Listed on Young Stock Exchanges. Evidence from the Muscat Stock Exchange, Working Paper.
• Uddin, M. H. and Chowdhury, G.M.(2005). Effect of dividend announcement and shareholders’ value: Evidence from Dhaka stock exchange, Journal of Business Research, 7, 61-72.
• Uddin, M. B. (2009). Determinants of market price of stock: A study on bank leasing and Industrial Services, and Food Company Shares. Journal of Modern Accounting and Auditing,5(7), 1-7.
• Venkatesh, P. C. (1989). The impact of dividend initiation on the information content of earnings announcements and returns volatility. Journal of Business,62 (April), 175- 197.
• Vieira, Elisabete F. S. (2005). Signaling with Dividends? New Evidence from Europe. Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE), PhD Thesis.
• Vivian, A. (2006). The Payout Ratio, Earnings Growth Returns: UK Industry Evidence. Working Paper, School of Economics, Finance and Business, University of Durham.
• Von Eije, H. and Megginson,W. (2006). Dividend policy in the European Union. Working Paper (http://ssrn.com/ abstract=891035).
• Walter, J. E., (1963). Dividend Policy: It’s Influence on the Value of the Enterprise. The Journal of Finance, 280- 291.
• Walter, J.E. (1963). Dividend policy: its influence on the value of the enterprise. Journal of Finance, 18 (2), 270- 291.
• Wang, M., Gao,S. and Guo,G. (2002). Dividend Policy of China’s Listed Companies. Working Paper.
• Watts, R. L. (1973). The Information Content of Dividends. Journal of Business, 46, 191-211.
• Weil, J. (2003). Companies Face a Harsh Reality Involving Dividend Payments. The Wall Street Journal, C1.
• Woolridge, J. R. (1982). The information content of dividend changes. Journal of Financial Research, 5, 237– 247.
• Woolridge, Randall,J. and Ghosh, C. (1985). Dividend Cuts: do they always Signal Bad News? Midland Corporate Finance Journal, 3 (2), 20-32.
• Woolridge, JR. (1983). Dividend changes and security prices. The Journal of Finance, 38 (5), 1607-1615.
• Yilmaz, K. and Gulay, G. (2006). Dividend Policies and Price-Volume Reactions to Cash Dividends on the Stock Market: Evidence from the Istanbul Stock Exchange. Emerging Markets, Finance & Trade, 42 (4), 19-49.
• Yoon, P. S., and Starks, L. (1995). Signaling, Investment Opportunities, and Dividend Announcements. Review of Financial Studies, 8 (4), 995-1018.
• Zaman, S. (2011). Is Dividend Policy An Important Determinant of Market Performance: Focus On Private Banks of Bangladesh? World Review of Business Research, 1(4), 135-144.
• Zulkifli et al. (2012). The impact of Dividend Policy on the Share Price Volatility. International Journal of Economics and Management Science, 2 (5), 2012, 01- 08.
License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.