IMPACT OF DIVIDEND ON SHARE PRICE OF INSURANCE COMPANIES

Abstract

The portion of a company's overall net profit made during a certain time period is known as the dividend. Investors (the company's shareholders) split the net profit of a business based on their individual investment shares. The most crucial aspect of a company that has a direct impact on stock prices is its dividend policy. Regarding profit management, distributing profits to shareholders, and keeping a portion of profits in the business's account to take advantage of better investment possibilities down the road, the Board of Directors of the company develops and executes the dividend policy. The analysis of the effect of dividend policy on a company's stock prices is the main goal of this research. The banking industry companies were chosen in order to investigate how dividend policies affect stock prices. Three insurance businesses' ten-year (2013–2022) financial data was gathered from their websites and financial reports, as well as from the Nepal Stock Exchange website. The findings showed that a sensible dividend policy is crucial for drawing in respectable investors and significantly fortifying a company's capital structure. In order to raise knowledge of earlier research in the field, a literature survey of pertinent books and periodicals served as the foundation for the study. A significant amount of secondary data about capital structure and pertinent dividend policies of these businesses was collected in order to get a critical perspective on the dividend policies of various firms and their influence on stock prices. The internet was used extensively to get secondary data. The study's conclusions showed that if a company's dividend policies are developed and put into effect after a thorough analysis of the market's capital structure and the dividend policies of other companies, they may have a favourable and desired effect on the company's stock prices. It is anticipated that the study's findings will aid academics, business schools, and researchers in comprehending the clear relationship between a company's stock price and its dividend policy.