More Studies on Dividend

Adhikari (2014) carried out a research on “Corporate dividend practices in Nepal” using primary as well as secondary data. The main objectives of his research were:

a.       To analyze the properties of portfolios formed on dividend.

b.      To examine the relationship between dividend and stock prices.

c.       To survey the opinions of financial executives on corporate dividend practices.

Major findings of this research are:

a.       Financial position of high dividend paying companies is comparatively better than that of low dividend companies.

b.      Market price of stock of both finance and non finance sectors are affected by dividends.

c.       There is a positive relationship between dividend and stock price.

d.      There is a negative relationship between dividend payout and earnings before tax to net worth.

e.       Stocks with larger ratio of DPS to book value per share have higher profitability. These profitability ratios of stocks paying larger dividends are also more variable as compared to stocks paying smaller dividends.

f.       Companies paying higher are reluctant to employ higher degree of leverage in their capital structures.

g.      The stocks with larger ratio of dividend per share to book value per share have also higher turnover ratio and higher interest coverage.

Budhathoki (2015) carried on a research on “The study of dividend policy of the commercial banks in Nepal on May 2014.” The main objectives of the study were;

a.       To highlight the dividend practices of commercial Banks.

b.      To compare the dividend policy followed by different commercial banks chosen.

c.       To provide the sample with some fruitful suggestion that can be implemented easily and possible guideline to overcome various issues and gaps based on the findings of the analysis.

Some of the major findings of this study are:

a.      The average earning per share (EPS) of the banks under study shows a positive result. But the coefficient of variation indicates that there is no consistency of EPS.

b.      The average dividend per share (DPS) shows that there is no regularity in dividend payment.

c.      The analysis of DPR shows that the Dividend Payout Ratio (DPR) of the banks is not stable.

d.     The average market price shows that there is quite high level of fluctuation.

Bhattarai (2016) conducted study on “Dividend Decision and its impact on stock valuation.” The objectives of this study were as follows:

a.      To test the relationship between dividend per share and stock prices.

b.      To identify whether it is possible to increase the market value of the stock changing dividend policy or pay out ratio.

c.      To determine the impact of dividend policy or payout ratio.

The study used simultaneous equation model are developed by friend and puckett (2015), to explain the prices behavior. The findings of the study were as follows:

a.       The relationship between dividend per share and stock prices is positive in the sample companies.

b.      Dividend per share affects the share prices variedly in different sectors.

c.       Changing the dividend policy or dividend per share might help to increase in  market price of shares.

d.      The relationship between prices and retained earnings per share is not prominent.

e.       The relationship between stock prices and lagged earnings price ratio is negative.

Pandey (2016) researched on “Pricing and yield behavior of Equity shares in Nepal:A case of commercial Banks”on March 2016. The main objectives of the study are:

a.       To establish relationship between market prices of commercial bank’s equity shares and their yield behavior in Nepal.

b.      To see how effective is yield in determining the market price of the securities?

c.       If yield is not the sole determining factor then what could be other factors, which could affect the market prices of the securities in Nepal.

d.      To identify problems of securities market in Nepal and suggest measure to correct the existing problems.

Main findings of this research are:

a.       Market prices of the equity shares ate overvalued when compared to the earnings per share, which is the primary indicator of the financial status of the concerned financial institution. This was mainly due to ignorance and Improper access to financial  health of the company.

b.      The result of simple regression analysis between the market price and yield indicator reflected that net worth per share explained the best of the market prices compared to other indicators. Dividend per share and earnings per share were equally explanatory, whereas dividend payout ratio was not a good indicator of stock pricing. The result showed that market price corresponds to the earnings per share at a greater extent and then to dividend per share and then to earnings per share.