RELATIONSHIP BETWEEN DIVIDEND

AND SHARE PRICES OF DISNEY FOR

THE LAST 20 YEARS.

-HEETANSH THAKKER(D016)
HETVI KAMDAR(D017)
ISHAN AMERKAR(D018)
ISHITA JHAMB(D019)
KANAK AGARWAL(D020)
LITERATURE REVIEW:

Khaled Hussainey (2010):

Khaled Hussainey in his research paper titled “Dividend Policy and share price
volatility” published in 2010 aims to examine the relationship between dividend
policy(dividend yield and dividend payout) and the volatility of stock price in the UK
stock market.
The author has used multiple regression analyses to explore the association between
share price changes and both dividend yield and dividend payout ratio.
The findings suggest that there is a significant negative relationship between the
dividend yield and the volatility of stock price. This is consistent with the findings of the
research paper given by Allen and Rachim (1996).
In his regression model the dependent variable price- volatility was regressed against
the two main independent variables; dividend yield and payout ratio.

Prince Acheampong and Evans Agalega(2013):

Prince Acheampong and Evans Agalega in their research paper titled “Examining the
Dividend Growth Model for Stock Valuation: Evidence from Selected Stock on the
Ghana Stock Exchange” published in 2013 used “Gordon's growth model” or also
called the “dividend growth model” and this methodology will be applicable in my
project which is why I will be using it.
METHODOLOGY:

1)CORRELATION AND REGRESSION ANALYSIS:

Regression analysis is used to estimate the relationship between dividend yield and
share price. The research also uses correlation models, specifically Pearson
correlation to measure the degree of association between the 2 variables. The share
price is taken as the dependent variable and used in a regression equation with
dividend yield as independent variable. The regression co-efficient is used in forming
the regression equation of y on x where y is the average stock prices and x is dividend
yield.

2) Gordon's growth model:

The Gordon Growth Model is used to determine the intrinsic value of a stock based
on a future series of dividends that grow at a constant rate. It is a popular and
straightforward variant of a dividend discount model (DDM). The Formula for the
Gordon Growth Model Is
P= D1/r-g
Where:
P is the current stock price;
g is the constant growth rate in perpetuity expected for the dividends;
r is the constant cost of equity capital for that company (or rate of return); and
D1 is the value of the next year's dividends.
BIBLIOGRAPHY:

1)Correlation and Regression Analysis:

 https://www.academia.edu/12772832/Relationship_between_Divid
end_Policy_and_Share_Price
 https://www.researchgate.net/publication/228383474_Dividend_pol
icy_and_share_price_volatility_UK_evidence

2) Gordon's growth model:

 https://www.researchgate.net/publication/318702452_Examining_the_Dividen
d_Growth_Model_for_Stock_Valuation_Evidence_from_Selected_Stock_on_t
he_Ghana_Stock_Exchange
 http://people.stern.nyu.edu/adamodar/podcasts/cfUGspr16/Session20.pdf