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Research Article

EEO. 2021; 20(1): 8106-8118

Effect Of Dividend Policy On The Share Price: A Case Of Non-Financial Firms

Asif Ali, Fiaz Ahmed Bhutto, Muzamil Saeed.


The Purpose of this study is to observe the relationship between dividend policy and stock return (share price). In this study 40 non-financial firms listed on Pakistan Stock Exchange have been selected for analysis who have paid cash dividends. The period for analysis is ten years from 2012 to 2021. For adopting sample, the random sampling technique has been used in the study. Due to panel data Ordinary Least Square regression was used to obtain the relationship between the variables. The results show significant relation of dividend yield and dividend per share-to-share price. And dividend payout ratio has insignificant relation with share price. So, findings suggest that sample firms should offer cash dividends regularly because it will lead upward movement in market price of shares. While the profit retention of firms will cause the downward movement in value of market price of shares.

Key words: Dividend Policy (DP), Stock Return (SR), Dividend Yield, Dividend Payout Ratio (DPR), Dividend Per Share (DPS), Share Price (SP).

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