Impact of Cash Dividends and Retained Earnings on Stock Price A Comparative Study of High and Low Growth of Firms

Abstract

“The purpose of this study is to examine the empirical relationship between cash dividend, retained earnings and the stock prices. Different non- financial firms listed in Pakistan stock exchange are selected for this analysis over the period from 2009 to 2013. The balanced panel data is used to examine the relationship between cash dividend, retained earnings and the stock prices. The results of this study shows that in low growth firms there is a negative relationship between dividend yields per share and stock price and there is also negative relationship between retained earnings and stock price. And the results of this study also shows that in high growth firms there is a negative relationship between dividend yield per share and stock price and there is a positive relationship between retained earnings and stock price. This study contribute to the existing literature of Pakistan because this area is uncovered”.