The Impact of Dividend per Share on Stock Price of Companies Listed on Dhaka Stock Exchange

This study intends to observe the impact of dividend per share on stock price of companies listed on Dhaka Stock Exchange. The study uses a firm-level panel data set of 61 companies from eight major sectors of DSE for ten years from 2008 to 2017. Pearson correlation was used to examine the relationship between dividend per share and stock price of each sector under the study and mixed results were found. Simple linear regression was also used to investigate the impact of dividend per share on stock price. The findings of the impact of dividend per share on stock price of companies of eight selected sectors produced very interesting results. The results of simple linear regression show that Banking, Food & Allied Product, Pharmaceuticals & Chemicals and Insurance sectors have significant impact of dividend per share on stock price, which supports the relevance theory of dividend i.e., Walter’s model and Gordon’s model. Furthermore, dividend per share has significant positive impact on stock price of Food & Allied Product and Pharmaceuticals & Chemicals sectors, while in Banking and Insurance sector, dividend per share has significant negative impact on stock price. On the other hand, there is no significant relationship between dividend per share and stock price of Financial Institutions, Engineering, Fuel & Power and Textile sectors, which supports Irrelevance theory of dividend i.e., MM Hypothesis. Thus, the impact of dividend on stock price has still remained a controversial issue. That is, dividend puzzle (Black, 1976) has not yet solved.