Literature Review:

Miller and Modigliani in 1961 presented dividend irrelevance theory by taking assumption of
perfect capital market. According to them investors are indifferent towards receiving cash flows
in form of dividend or as capital gain. One thing that they assume is the Investment
Opportunity
Bhattacharya (1979) suggest that due to information gap among all the stakeholders of the firm,
Dividend policy plays important role in conveying the information about the financial health of
the firm. According to him the dividend policy of the firm have symmetric information about the
financial condition of the organization.
According to Baskin (1989) there is negative relation between dividend yield and stock price
volatility means higher the dividend yield lower will be the volatility in share price.
Nishat and Irfan (2001) found that there is significant impact of dividend payout and dividend
yield on stock price volatility in an emerging market like Pakistan.
Nazir et al (2010) found that dividend payout and dividend yield significantly influenced the
stock prices while earning and growth of the company have positive effect on the stock prices.
They exposed negative relationship of size and leverage with the share prices.
M.Asghar et al (2011) conducted their study on non-financial firms listed on Karachi Stock
Exchange, used data for the period 2005-2009. They analyzed the data by using correlation and
regression analysis and as a result exposed the existence of positive relationship between share
price volatility and the dividend yield.
Nor Anis Binti shafai (2012) presented his study on 841 firms for the period of 10 years 20012010 listed on Bursa Malaysia main Board. He used multivariate regression analysis and
concluded his study as dividend policy and price volatility having significant relation with each
other.
Kanwal Iqbal (2012) in her research study exposed that the share prices have significant relation
with stock dividend, profit, ROE and earning per share. As she analyzed the data of 29
companies listed on KSE for the period of 10 years using the panel data approach, fixed and
random effect model.
M.Abrar-ul-haq (2015) examined the 11 non- financial firms listed on KSE, used the regression
analysis model and concluded his study with no results as he found no relation between the
variables and the reason was that the sample he taken was in small size as compare to other
studies. He suggests that the study can be further extended by taking the sample of large size.
Muhammad Akbar and Hamayun Baig (2010) analyzed dividend announcements of cash, stock
and both cash and stock of 79 firms listed on KSE. They found that it will be significant situation
if the firms having investment opportunities should retain their earnings and invest their cash
over there. And the companies should announce the dividend when future prospects are bright
for firms operations and profitability. They further explains that stock dividend announcements
are statistically significant. Investors dislike cash dividend since they are taxable.

According to Nadeem Nazir (2014) has confirmed through his work that there is significant
positive relationship between variables b conducted panel data model on 17 banks listed on KSE.
He suggested that management of banks must consider regressors as key indicators of stock price
instability in the market.
Mr.Ashok Yakkaldevi (2014) found that dividend announcement having significant impact on
share prices of companies. He conclude this by analyzing 30 firms listed on BSE. Thus he favor
Walters and Gordons theory of share price.
According to Abdullah Al Masum (2014) there is significant negative relationship between
dividend yield and market share price. While retention ratio have negative and statistically
insignificant relation with the market share price.
Zuriawati Zakaria et al (2012) applied least square regression model, analyzing data of 77 firms
and found that higher DPR will lead to higher volatility in share price. And higher the size of
company higher will be the company needs to face share price volatility.