Share Price Volatility: The Case of Pharmaceutical and Chemical Companies

Mohammad Nayeem Abdullah, Kamruddin Parvez, Rahat Bari Tooheen and Sabrina Ahsan

The study explores share price volatility as an indicator of economic stability in a developing country setting. This study examines the share price volatility of eight selected pharmaceutical and chemical companies listed on the Chittagong Stock Exchange (CSE). The study period was from 2006 to 2013. Data was compiled from a mix of primary and secondary sources. A combination of statistical techniques including Regression Analysis is used to explore the relationship between the selected variables. Average Share Price is the dependent variable, while Dividend Yield, Earnings Per Share, Price Earnings Ratio and Returns On Equity are the independent variables. The results demonstrate that share price volatility is significantly influenced by the Price Earnings Ratio along with Earnings Per Share.