 The relationship between dividend- and non-dividend-paying stock prices when considering financial distressReza Rahgozar American Journal of Finance and Accounting, 2015, vol. 4, issue 1, 19-27 Abstract: Previous studies on whether dividend policies affect stock prices have offered contradictory results. This study investigates whether dividend-paying stock prices outperform non-dividend-paying stocks and whether there is a strong relationship between dividends and stock prices. It also examines the financial health of dividend-paying firms vs. non-dividend-paying firms. The empirical results show that there is a strong relationship between share prices and dividends. The Altman financial stress test shows that the average Z-scores of non-dividend-paying stocks are higher and are more volatile than dividend-paying companies. The Z-score test strongly rejects the hypothesis that dividend- and non-dividend-paying firms are equally exposed to financial risks. Contrary to some beliefs, the results of this study show that dividends are an important factor in determining stock prices and dividend-paying stock prices are less volatile than non-dividend-paying stocks. Keywords: valuation; stock prices; dividend paying stocks; non-dividend paying stocks; financial strength; financial distress; dividend policies; dividends; financial stress test; price volatility; financial risks. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:amerfa:v:4:y:2015:i:1:p:19-27 Access Statistics for this article More articles in American Journal of Finance and Accounting from Inderscience Enterprises Ltd |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.