Effect of dividend on market price of stock in Nepalese finance companies

Abstract

This main purpose of the study is to examine the effect of dividend on market price of stock in Nepalese finance companies. Secondary data was gathered from finance companies of Nepal for ten year periods (2012/13-2021/22). This study used descriptive analysis, correlation analysis and multiple regression analysis. This study found that finance companies are paying either cash or stock dividends to their shareholder and they have high market price share. However, a wide range market stock price is found. However, the dividend yield is low percent with the less volatile position of finance companies in Nepal. The correlation analysis reveals that dividend per share, earning per share and price earning share have significant positive relationship with market price of stock of sample finance companies. However, dividend yield has negative and insignificant relationship with MPS and size of companies has insignificant positive relationship with market price of stock of finance companies in Nepal. The regression analysis found that dividend per share has insignificant positive impact on market price of stock of the finance companies. Similarly, dividend yield has insignificant negative impact on market price of stock. However, earning per share and price earning ratio have significant positive impact on market price of stock. Moreover, size of companies has insignificant negative impact on MPS of finance companies in Nepal. Therefore, earning per share and price earing share are the major factors of market price of stock of the finance companies in Nepal. Key words: Market price of stock, dividend per share, earning per share, price earnings ratio and dividend yield