Long-term Stock Returns of Companies Implementing Diverse Dividend Policy: Evidence from Poland
Long-term Stock Returns of Companies Implementing Diverse Dividend Policy: Evidence from Poland

Author(s): Aleksandra Pieloch-Babiarz
Subject(s): Business Economy / Management, Economic policy, Financial Markets
Published by: Masarykova univerzita nakladatelství
Keywords: dividend policy; stock returns; buy-and-hold abnormal returns; capital gain; the Warsaw Stock Exchange;
Summary/Abstract: The aim of this article is to examine whether there is a statistically significant relationship between the type of dividend policy and the long-term stock returns. Considering the diverse dividend policy of companies, I am particularly interested in the role of constant dividend per share policy, constant payout ratio policy, extreme dividend policy, residual dividend policy and hybrid dividend policy in shaping the market share price of companies listed on the main market of the Warsaw Stock Exchange in the years 2001-2016. I conduct the research employing the buy-and-hold abnormal return, Fisher’s LSD test and OLS regression model. The main results of my empirical study indicate that the buy-and-hold returns for the companies implementing a specified dividend policy are higher than the buy-and-hold returns for the WIG index. Moreover, regardless of the type of dividend policy, abnormal stock returns increase along with an increase in the number of years of the regular dividend payouts. The main conclusion from my analysis is that conducting the specified dividend policy has a significant impact on the long-term market share price behavior. I observe that the diversity of dividend policy is accompanied by the diverse stock returns achieved by the stock market investor. The scientific research presented in this paper seems to be valuable due to the lack of academic studies on the impact of implementing the different types of dividend policy on achieving the long-term abnormal stock returns.

• Details
• Contents