A Study of Dividend Policy Essay

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The Study of Dividend Policy and Its Effect on Share Price of Listed Firms in an Emerging Market: The Case of MAURITIUS by Nilesh Maistry Student ID: 1013049 B.Sc (hons) Finance University of Mauritius 2013 Acknowledgment I wish to express my sincere and heart felt thanks to my project Supervisor, Mr Ushad Agath Subadar for his invaluable advice and guidance throughout this dissertation. His constructive comments and his articles on dividend policy have been inspiring and instrumental in accomplishment of this work. I extend my deep gratitude to Dr Boopen Seetanah for his assistance, encouragement and valuable suggestions. I am also grateful to the staff of the Stock Exchange of Mauritius for their cooperation for providing the data. Special thanks go to some of my friends who provided their help at crucial moments: Teeshma, Nabilah, Zubeir and Aanas. Finally, this research is dedicated to my family for their continuous moral support and companionship. Without their help, this dissertation would not have been possible. Abstract The main objective of this study is to show whether or not dividend policy has an effect on listed companies’ share prices in Mauritius. Dividend policy has been researched on for over decades. The question of whether dividend policy makes a difference in the operation of a firm has been asked by many researchers. The paper attempts in explaining the effect of dividend policy on share prices after controlling for dividend yield, dividend payout ratio, stock prices (at time t-1), earning volatility, growth of firms, and size of firms. The study followed the theory of Baskin (1986) to find out whether the dividend policy makes a difference, however, changes are made to regression model. Data was retrieved from the SMB securities website and annual reports of listed companies was taken from the Stock Exchange handbook

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