DIVIDEND POLICY AND STOCK PRICE VOLATILITY IN THE U.S. EQUITY CAPITAL MARKET

Abstract

What factors affect the volatility of a stock's price over time? What specific financial factors lead a stock to be more volatile than others? This study attempts to identify the impact of certain financial variables on the volatility of a stock's price overtime by analyzing the.financial data of over 500 publicly traded.firms found through the Value Line Investment Survey database using Ordinary Least Squares (OLS) Regression. The study tests the effects of financial variables (deemed appropriate by the finance literature) on stock price volatility (as measured by the stock's standard deviation) for a sample of firms screened.from the Value Line Investment Survey database. By analyzing these selected financial.factors on a large sample of firms, this study will also identify those financial variables that have proven historically significant in explaining stock price volatility. The study results add to the body of dividend policy literature by either supporting or rejecting the theories advanced in the literature. Results support the idea that large dividend paying stocks are in fact less risky to own as an investment. Going forward, an investor would be advised to keep these variables in mind as the United States equity markets continue to hold large amounts of volatility and risk.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 42 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.