Abstract

Numerous studies has been conducted in the area of dividend policy, yet little were made to find association between dividend policy and share price volatility especially in emerging market like Malaysia. Using data from 2002 to 2011, results from a cross sectional multiple regression analysis found a significant negative relationship between dividend yield and share price volatility in Malaysia. On the other hand, in line with previous studies, a significant positive relationship was found between leverage and share price volatility. This study contributes to the dearth of literatures associating dividend policy and share price volatility as well as supporting the dividend relevant theory. Based on past researches on dividend policy conducted in Malaysia, there is no other similar study seek to prove the relationship between dividend policy and share price volatility especially when it incorporates latest data up to 2011.

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