Impact of Payout Policy on Market Value

Md. Nayeem Abdullah, Syed Manzur Quader and Jyotirmoy Saha

This study examines the impact of dividend payout on the market value of selected Bangladeshi firms. Generalized method of moments (GMM) technique have been applied to estimate the dynamic regression models using a panel data of 198 companies listed on the Chittagong Stock Exchange (CSE) during 2003 to 2015. A statistically significant positive relationship is found between pay out and market value of the sample companies. Therefore, the Dividend Irrelevance Proposition of Modigliani and Miller have been rejected for the Bangladeshi firms in our sample. The findings of this study which are in disagreement with the dividend irrelevance theory hint to the fact that the Bangladesh financial market is not fully efficient. Panel data set and dynamic model used to analyze the financial market in case of Bangladesh is novel.

DOI : https://doi.org/10.21102/irbrp.2018.03.141.07