Dividend Policy and Price Volatility. Empirical Evidence from Jordan
Imad Zeyad Ramadan ()
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Imad Zeyad Ramadan: Applied Science University
International Journal of Academic Research in Accounting, Finance and Management Sciences, 2013, vol. 3, issue 2, 15-22
The aim of this paper is to investigate the influence of the dividend policy on the share price volatility for the Jordanian industrial firms. All the 77 Jordanian industrial firms listed at Amman Stock Exchange for twelve years from 2000 to 2011 have been selected. Descriptive analysis, correlation analysis and a cross-sectional time series multiple least square regression method have been used to present data analysis, test hypotheses, and achieve the objective of the study. The experiential results showed significant negative effect of the two components of the dividend policy D_Y and D_P, on the share price volatility, indicating that as the Jordanian industrial firms increase their dividend yield and/or dividend payout, the stock prices tend to stability, as the price volatility fall, and thus, the share price risks fall. Moreover, the results conclude that the dividend policy has an impact on the price volatility, and that the managers of the Jordanian industrial firms have the ability to affect their firm's share price by adapting dividend policy that suits their target investors. Moreover, the study suggests that duration effect theory and signaling theory are relevant in determining the share price volatility in the Jordanian equity market.
Keywords: Dividend policy; share price; Jordan (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:3:y:2013:i:2:p:15-22
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