Abstract
Relationship between Dividend Policy and Volatility of the share prices: Evidence from Indian Pharmaceutical and IT companies
Highlights
The dividend policy is the most debated topic in the financial literature, many papers have been done abroad in order to understand the relationship between the dividend policy and the share prices
The research studies the relationship between the dividend policy and the Volatility of the share prices in the Indian pharmaceutical industry and the Information technology
The study shows that there is an inverse relation between the Dividend Policy (Dividend Yield and Dividend Payout) and the Volatility of the share prices
Summary
The dividend policy is the most debated topic in the financial literature, many papers have been done abroad in order to understand the relationship between the dividend policy and the share prices. MM approach states that the dividend policy and the share prices do not have any relationship but the dividend policy is one of the determinants of the increase or decrease of the shareholders wealth, so when there is an increase in the shareholder wealth the investors will try to invest more thereby increasing the price of the share prices. Though this holds true in some countries, the relationship between the dividend policies on the share prices may be positive or negative. The study uses the control variables such as the Earnings Volatility, Long-Term Debts, and Growth in Assets, Firm Size to make the model free from the effect of these variables
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