Dividend policy and stock price volatility of industrial products firms in Malaysia
Abstract
Purpose
The purpose of this paper is to analyse the relationship between stock price volatility (SPV) and dividend policy of industrial products firms listed on Bursa Malaysia.
Design/methodology/approach
The sample comprises 166 industrial products public-listed firms covering a time span from year 2003 to 2012. Using Baskin’s framework, firm’s SPV is related to dividend payout, controlling for earnings volatility, firm size, leverage and growth of assets. Further, the impact of the global financial crisis on the relationship between SPV and the tested variables is examined.
Findings
Earning volatility significantly explains SPV of industrial product firms during the crisis period, while dividend payout ratio (PR) predominantly influences volatility during pre- and post-crisis sub-periods. The empirical results indicate that dividend policy is a strong predictor of SPV of industrial products firms in Malaysia, particularly during the post-crisis period.
Originality/value
The paper explores the firm’s SPV and dividend policy for a new set of data focussing on industrial products firms listed on the Malaysian Stock Exchange.
Keywords
Acknowledgements
The authors would like to thank the Malaysian Ministry of Education under the Fundamental Research Grant Scheme for providing the resources and facilities that assisted in the conduct of this study (Research Grant No: FP025-2016).
Citation
Zainudin, R., Mahdzan, N.S. and Yet, C.H. (2018), "Dividend policy and stock price volatility of industrial products firms in Malaysia", International Journal of Emerging Markets, Vol. 13 No. 1, pp. 203-217. https://doi.org/10.1108/IJoEM-09-2016-0250
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited