Abstract
One of the most disputed subjects in the field of business finance is the relationship between dividend policy and market price of share. There is good volume of literature for and against this issue. An increase in dividend payment is seen as a positive indicator whereas a decrease in dividend payment as a negative indicator on the future earnings prospects of the company, thus leading to an increase or decrease in share prices of the firm (Vijayakumar, 2010; Sattar et al., 2017). The present study has been undertaken to evaluate the effect of dividend policy on market prices of shares of Nifty 50 companies listed on the National Stock Exchange (NSE) for 2022–2023. The data have been analyzed by employing multiple panel data regression models namely pooled regression, fixed effect model and random effect model. The Hausman test has been used to suggest the most appropriate regression model. The result of the Hausman test indicates that random effect model is more relevant in describing the relationship among the given variables. The results of the random effect regression model support the relevant approaches of dividend policy. Thus, we conclude that there is significant effect of dividend policy on the stock price of firms.
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