Impact of Dividend Policy on Stock Price of Commercial Banks in Nepal

Abstract

This study aimed to examine the impact of dividend policy on stock price of commercial bank in Nepal. The research analyzed of dividend policy like earning per share, dividend per share, dividend payout ratio, price earning ratio and dividend yield ratio against the market price per share which was used as impact od dividend policy on stock price of Nepalese selected commercial banks. Secondary data were collected from Nepal Rastra Bank, annual report of commercial banks, different published articles. For years from 2010/11 to 2018/19 (fiscal year). Data were analyzed by using appropriate the descriptive research design was used. The correlation and multiple regression model was used to explain the relationship and test the significance between dividends and stock price. The finding from this study indicate there is positive relationship between Market price per share on Earning per share, Dividend per share, Price earning ratio and negative relationship between Dividend payout ratio and Dividend yield ratio. There is significant correlation between Market price per share on Dividend per share, Dividend payout ratio and Price earning ratio. There was insignificant correlation between Market price per share and Earning per share as well as Market price per share and Dividend yield ratio. The recommendation that each and every firm should provide the information regarding dividend policy and its activities and performance investors can analyze the situation and invest their money in the firm. So, investors should consider for their investment decision while predicting future dividend. Key words: Market Price per Share, Earning per share, Dividend per Share, Dividend Payout Ratio, Price Earning Ratio, Dividend Yield Ratio.