Impact of Dividend Policy on Share Price Volatility: A Comparative Study of the Manufacturing Companies Listed in Dhaka Stock Exchange

The purpose of this study is to examine the relationship between dividend policy and share price volatility of the manufacturing companies listed on the (DSE) Dhaka Stock Exchange. For this purpose, we select a sample of 35 firms listed in DSE among all the manufacturing sectors for sixteen years (2004-2019). We examine the relationship between share price volatility with two direct measurements of dividend policy (dividend yield and dividend payout) by applying multiple regression for a period of sixteen years from 2004 to 2019. We expand the primary regression model by adding the control variables, including the firm\u27s size, earning volatility, financial leverage, and growth. We show a comparative study of the regression models using pooled OLS, Fixed Effect Model, and Simultaneous Equation Model. The two-stage simultaneous equation method is estimated by including all the exogenous variables as instruments. Results of the models show a significant negative association between share price volatility and dividend policy (dividend yield and dividend payout). Moreover, a firm\u27s size and growth have a significant positive association with share price volatility