Factors Affecting Share Price in Insurance Companies (A study on life insurance companies of Nepal)
Date
2021
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Management
Abstract
This study examines the factors affecting the share price of Nepalese life insurance
companies. Market price per share is selected as dependent variable while earning
per share, divided per share, price earnings ratio, dividend payout ratio, and dividend
yield ratio were chosen as firm specific independent variables. The data were
collected from the insurance and banking statistics and supervision report published
by Nepal Rastra Bank and annual report of selected life insurance companies. The
correlation and multiple regression models were estimated to test impact of firm
specific factors on share price of Nepalese life insurance companies.
Using data of 4 insurance companies listed in NEPSE for the period 2012/132018/19,
the result shows that company's specific variables like earnings per share,
divided per share, price earnings ratio, dividend payout ratio, and dividend yield
ratio are the major determining stock price in context of life insurance companies in
Nepal. The correlation between MPS and EPS is 0.654 which is moderate degree
positive correlation, similarly MPS and DPS is 0.538, MPS and DPR is 0.225, MPS
and PER is 0.486, MPS and DYR is 0.256 respectively. There is positive relationship
between market price per share and other dividend variables like, earnings per share,
dividend per share, dividend payout ratio, price earnings ratio and dividend yield
ratio.
Similarly, the value of R-square value as evident from multiple regression is 0.498
which means 49.8 % variation in Market price per share of Nepalese insurance
companies is explained by the independent variables. However, the remaining 51.2 %
is still unexplained in this research. In order to find out the awareness of investor
towards impact of dividend on market price per share self- administrative
questionnaire have been distributed among the investors. The response of respondent
was positive it means investors are aware about the factors influencing market price
of share.
Key Words: Market price per share, Dividend per share, dividend payout ratio, price
earnings ratio and dividend yield ratio.
Description
Keywords
Market price per share, Dividend per share, dividend payout ratio