ASSOCIATION BETWEEN DIVIDEND POLICY AND SHARE PRICE OF NEPALESE INSURANCE COMPANY

Abstract

The major objectives of this research were to analyze the elements influencing the profitability of insurance companies in Nepal, specifically NLIC, ALICL, NLICL, SICL, SIC, and SIL, and to assess the trends in dividend distribution and its impact on share prices within the insurance industry. The research adopted a quantitative research approach and utilized financial data from the aforementioned insurance companies spanning a ten-year period from 2012/13 to 2021/22. The population in focus was the financial data of NLIC, ALICL, NLICL, SICL, SIC, and SIL operating within Nepal's insurance sector. A sample of these companies' financial data was collected and analyzed to draw conclusions regarding their profitability and dividend patterns. The research duration encompassed the ten-year period mentioned above, offering a comprehensive perspective on the trends and patterns within the insurance industry during this time frame. Quantitative techniques, including mean, median, standard deviation, and correlation coefficients, were employed to analyze the financial data and draw conclusions. The findings indicated that the insurance companies under study consistently demonstrated strong financial performance, with EPS, DPS, MPS, PE Ratio and Dividend payout ratio surpassing national averages, signifying their robust capitalization. Furthermore, positive correlations were established between EPS, DPS, PE Ratio, and DPR, revealing that these variables had a positive relationship with MPS, suggesting that profitability and dividend patterns significantly influenced share prices within the Nepalese insurance industry.