Impact of firm specific variables on stock price of Nepalese commercial banks
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Abstract
Many studies on dividend policy and its impact on stock price have been conducted in
developed countries, but very few have been conducted in developing markets like Nepal.
The Nepali market is unstable, thus there is a great need to research how factors like EPS,
DPS, and PE Ratio affect stock price. Since changes take place daily, the market needs to
be thoroughly researched to give investors the most recent information. This study
elaborates the impact of internal factors on stock prices. This study can help management
structure their dividend policies and regulate other internal factors that have some bearing
on stock price. Investors can use the information from this study to tailor their investment
plans. In the study, three variables are taken as independent variables: Dividend per share,
Earnings per share and Price earnings ratio. Here, Market price per share is taken as the
dependent variable. The descriptive and causal comparative research designs have been
applied and the secondary data is used for the analysis. The data has been collected
through secondary sources. The study was conducted on 10 ‘A’ level banks involving in
banking activites at least for 10 years. The numbers of observations include 100
observations from 10 commercial banks collected from the fiscal year 2011/12 to 2020/21.
In this study, the data was evaluated using mean, median, mode, standard deviation,
variation, correlation and regression. The findings revealed that DPS, EPS and PE ratio
have significant effect on the MPS.
Key words: Dividend per share, Earnings per share, Price Earnings ratio and Market price
per share.