Impact of dividend on market price of stock of development banks in Nepal

Abstract

ABSTRACT This study analyzes the impact of dividend on market price of stock in development banks of Nepal. Secondary data was gathered from development banks of Nepal for Nine years periods (2070/71-2078/79). This study has taken descriptive and causal relationship research design to analyze the impact of dividend on stock price of banks; and has employed descriptive analysis, correlation analysis and multiple regression analysis. It shows that Nepalese development banks have distributed dividend to the shareholders but not following stable dividend payout policy. A wide range of market stock price is found. However, the dividend yield is low of sample banks. This study also reveals that the correlation analysis of earning per share, return on assets, dividend payout ratio has significant positive relationship with market price of stock in Nepalese development banks. Similarly, bank size and price earnings ratio have insignificant positive relationship with MPS of the banks. However, Dividend yield has insignificant negative correlation. The regression result depicts that earning per share has significant with MPS and dividend yield have significant negative effect on MPS of development banks in Nepal. The implication of the findings is that devoting adequate time in designing and disseminating a dividend policy are desired in improving the performance of listed companies and enhancing the stock price in the pre-emerging capital markets. The findings could be useful for research scholars, financial analysts and investors to address the gap in the extent of this literature. Key words: Market price per share, earning per share, price earnings ratio, return on assets, dividend payout ratio, total assets, profitability and dividend yield