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The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model
Dissertation (MCom (Financial Management Science))--University of Pretoria, 2012.
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| Format: | Thesis |
| Language: | English |
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University of Pretoria
2013
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| _version_ | 1867613567064211456 |
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| access_status_str | Open Access |
| author2 | De Wet, Johannes H.v.H. (Johannes Hendrik van Heerden) |
| author_browse | De Wet, Johannes H.v.H. (Johannes Hendrik van Heerden) |
| author_facet | De Wet, Johannes H.v.H. (Johannes Hendrik van Heerden) |
| collection | Thesis |
| dc_rights_str_mv | © 2012 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria |
| description | Dissertation (MCom (Financial Management Science))--University of Pretoria, 2012. |
| format | Thesis |
| id | oai:repository.up.ac.za:2263/31010 |
| institution | University of Pretoria (South Africa) |
| language | English |
| last_indexed | 2026-06-10T12:38:11.690Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UPSpace — University of Pretoria Institutional Repository |
| publishDate | 2013 |
| publishDateRange | 2013 |
| publishDateSort | 2013 |
| publisher | University of Pretoria |
| publisherStr | University of Pretoria |
| record_format | dspace |
| source_str | UPSpace — University of Pretoria Institutional Repository |
| spelling | oai:repository.up.ac.za:2263/31010 The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model De Wet, Johannes H.v.H. (Johannes Hendrik van Heerden) mvitampinda@gmail.com Mpinda, Mvita Freddy UCTD Relevance and irrelevance theory Shareholders’ wealth Vector error correction model (VECM) Market price per share Granger causality model Dividend policy Earnings per share (EPS) Dissertation (MCom (Financial Management Science))--University of Pretoria, 2012. Dividend policy is widely researched in financial management, but determining whether it affects the market price per share is difficult. There has been much published on the subject, which presented theories such as the Modigliani, Miller, Gordon, Lintner, Walter and Richardson propositions and the relevance and irrelevance theories. However, little research has been done on the impact of dividend policy on shareholders’ wealth while considering the short- and long-run effects. The Vector Error Correction Model (VECM) was used to describe the short-run and long-run dynamics or the adjustment of the cointegrated variables towards their equilibrium values in South Africa. This study attempts to explain the effect of dividend policy on the market price per share. A sample of 46 companies listed on the Johannesburg Securities Exchange (JSE) was selected for the period 1995-2010. Three variables were used, namely the market price per share, the dividend per share and the earnings per share. The market price per share was used as a proxy in measuring shareholders’ wealth and the dividend per share was used as a proxy in measuring the dividend policy. Fixed and random effects models were applied to panel data to determine the relation between dividend policy and market price per share. The fixed effects method was used to control the stable characteristics of the companies over a fixed period. The random effects model was applied when the companies’ characteristics differed. Results for both models indicated that dividend yield is positively related to market price per share, while earnings per share do not have a significant impact on the market price per share. To test the strength of the long-run relationship, the VECM was applied. The coefficient for dividend per share in the co-integrating equation was positive, while the coefficient for earnings per share was negative. This confirms previous research findings. The results suggest that there is a long-run relationship between dividend per share and market price per share. The Granger causality test indicates there is bi-directional Granger causality between market price per share and dividend per share in South Africa. Therefore dividend policy does have a significant long-run impact on the share price and therefore provides a signal about the company’s financial success. Financial Management MCom (Financial Management Science) Unrestricted 2013-09-09T07:59:39Z 2013-07-30 2013-09-09T07:59:39Z 2013-04-19 2012 2013-07-18 Dissertation Mpinda, MF 2012, The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-07182013-132837 / > F13/4/331/gm http://hdl.handle.net/2263/31010 http://upetd.up.ac.za/thesis/available/etd-07182013-132837/ en © 2012 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria application/pdf University of Pretoria |
| spellingShingle | UCTD Relevance and irrelevance theory Shareholders’ wealth Vector error correction model (VECM) Market price per share Granger causality model Dividend policy Earnings per share (EPS) The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model |
| title | The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model |
| title_full | The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model |
| title_fullStr | The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model |
| title_full_unstemmed | The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model |
| title_short | The impact of dividend policy on shareholders' wealth : evidence from the Vector Error Correction Model |
| title_sort | impact of dividend policy on shareholders wealth evidence from the vector error correction model |
| topic | UCTD Relevance and irrelevance theory Shareholders’ wealth Vector error correction model (VECM) Market price per share Granger causality model Dividend policy Earnings per share (EPS) |
| url | http://hdl.handle.net/2263/31010 http://upetd.up.ac.za/thesis/available/etd-07182013-132837/ |