The purpose of this study is to investigate the relationship between dividend policy and stock price volatility (SV) in the Sri Lankan context. Based on the Hausman test results, the cross-section random effect model (CSREM) is performed in order to test the hypotheses. The Granger causality (GC) test is employed in order to test the short-term relation between dependent and explanatory variables. The CSREM test revealed that there is a significant negative impact from dividend payout, a significant positive impact from company size and no evidence of significant impact from dividend yield (DY) on SV. Furthermore, GC tests revealed that there is no short-term impact from dividend payout on SV and it showed a feedback exists between company size and stock price volatility. It is also reported that a unidirectional causality exists from DY to SV in any lag level. The management could use dividend policy as a mechanism to control stock price volatility. They could reduce the SV by increasing their dividend payout and it is possible to increase the volatility by enhancing the DY or firms size in the short run. This study is the first to accentuate that DY has a significant impact on SV in the short run and the first to discuss the same phenomenon in the Sri Lankan context, as per the best of the authors' knowledge.
This study reviews one of the unresolved research puzzles in corporate finance; why do companies pay dividends? In this context, a qualitative study dealing with content analysis is carried out based on the theoretical and empirical research. After critically reviewing 407 research articles in dividend policy, 50 empirical studies were taken as the sample based on the relevancy to the research puzzle. The content analysis has provided some significant insights and stylized facts with regard to the corporate dividend policy. However the previous research studies were fundamentally flawed in their design based on quantitative approaches in order to elucidate a behavioural explanation. As a result, most of the study findings cannot be relied upon to see consistency with the theories in question. Despite years of theoretical and empirical evidences, the findings show that the dividend puzzle is still remaining as unresolved research phenomenon in corporate finance due to lack of unanimity among the researchers over the explanations. This study provides the reader an all-embracing understanding on the theories and empirical explanations over the dividend puzzle. It is imperative for the researchers to focus on all empirical and theoretical explanations in a single study and test them simultaneously in a triangular approach in order to have a single consensus over this puzzle. Thus, developing a new paradigm or models to deal with the dividend puzzle is suggested, until then the deduction of various theories in different studies are inconclusive and inconsistent
The purpose of this study is to critically and comprehensively review the ways and means of using triangulation in finance research to overcome the current drawbacks arisen from a single approach. Employing systematic literature review method, the findings divulged that the finance based research studies on quantitative methods, behavioural and proxy variables should be further validated through triangulation approaches, thereby increasing the validity, completeness, confirmation, and confidence over findings, minimizing the inherent weaknesses of single-method approaches, and avoiding contradictions over explanations. This study is the first comprehensive review of the uses of triangulation in finance research and it demonstrates how, why and under what circumstances can triangulation be meaningfully integrated and implemented to provide a deeper and comprehensive understanding of finance phenomena.
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