Dividend policy effect on stock price of two sectors - Materials sector and industrials sector
Abstract
This study will examine the relationship between dividend policy and stock price. Our goal is to know if the change in dividend policy affects stock prices and if so, how it affects. The sample that we will take is the companies in the two industries with the most listed companies in Ho Chi Minh Stock Exchange (HOSE): materials sector and industrials sector. Data panel will be used for OLS regression, fixed effect model and random effect model after running Hausman’s test. To examine the relationship of dividend policy and stock price, our model consists of two variable groups. The variable group representing dividend policy includes: dividend per share, dividend payout ratio and retention ratio. The variables control group that we choose are variables that represent business results: net income, earning per share and return on equity. Running the model one by one for the two industries we get is the only variable of dividend per share in the variable group representing dividend policy as having a relationship with stock price. In addition, variables that represent business results also have an impact on stock prices. However, the degree of influence between the two sectors is relatively different.