Dividend Policy And Share Prices (the Case Of Private Banks In Ethiopia)

Effort was made to see any association between dividends and share prices byrnobserving six private banks in Ethiopia. Data was taken for six years (2005 – 2010rnG.C.) and descriptive statistics employed with the objective of examining thernpresumed association between dividends and share prices. The dividend discountrnmodel was used to calculate ideal share prices at the banks. The results show there is arnstrong association between the crude measures of dividends and share prices.rnEarnings per Share are also strongly correlated with share prices. The Pearson’srnmoment correlation coefficients are statistically significant at 95% confidence level.rnHowever, evidence did not support the association between the real measures ofrndividends and share prices. Also, the actual share prices are a bit higher than modelrndetermined share prices for all the six banks. With much decision regarding therndividends and share premiums left to the general meetings of shareholders’, it is notrnclear whether dividends or EPS or other variables determines the share prices ofrnEthiopian private banks.

Get Full Work

Report copyright infringement or plagiarism