Open Conference Systems, ICQQMEAS2009

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THE EFFECT OF COMPANIES' DIVIDEND AND ECONOMIC POLICY OF FTSE/ASE-20 INDICATOR IN THE CONFIGURATION OF THEIR STOCK EXCHANGE PRICE
Vasileios Orfanos, Michail Evripiotis

Last modified: 2015-09-16

Abstract


Present study examines the consequences of the dividend policy of companies of FTSE/ASE 20 on their stock price. A sample of twenty companies looks through a seven-year period from 1999 up to 2005. Experimental approach is based on multiple regression analysis of price volatility as far as dividend policy is concerned, that is, dividend yield and payout ratio. In the process, variables are examined like corporate size, earning volatility, long-term debt (leverage) and asset growth. Conclusively, there is a conflict between the majority of the regressions’ results and theoretical expectations. Indeed dividend yield is negatively correlated to price volatility, as expected, yet the outcome is not statistically significant butin accordance with the Baskin paper’s results (USA 1989) for US corporate stocks. On the contrary outcomes comparing payout ratio to price volatility seem differentiating. On the one hand, payout is rather positively correlated to variables’ coefficient than negatively as we initially had expected. On the other hand results on size and growth (negative correlation) are expected and correlations between earnings volatility and long-term debt cannot safely be concluded. Finally overall one could argue, that under specific circumstances corporate dividend policy (via dividend yield) can affect stock price

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