Authors : Shirin Shams Ghahfarrokhi, Jamshid Pikfalak and Mahmood Bakhshi Nezhad
Abstract: According to financial-behavioral perspective, managers make their dividend decisions based on the signals received from the market, even if they know that the market price is taken away from the intrinsic value of the shares. On the other hand, in the presence of bubbles in the stock market, stock valuation is not done based on the actual performance of the companies and prices, as an indicator, cannot represent their performance. In this regard, the present study aimed to investigate the effects of price bubbles on dividend policies in companies listed in Tehran Stock Exchange from 2009-2014. Statistical tests were conducted on a sample of 147 companies amongst 483 companies. The required data were collected from stock exchange official websites and Rahavard-e-Novin Software. Then, the primary processing was carried out on the collected data using Microsoft Excel and the obtained information were used to test models in the Eviews Software. The empirical evidence obtained from hypotheses testing indicate that there are a significant inverse correlation between price bubble and cash dividend and a significant direct correlation between price bubble and stock dividend policy at 95% confidence level.
Shirin Shams Ghahfarrokhi, Jamshid Pikfalak and Mahmood Bakhshi Nezhad, 2016. The Effect of Price Bubbles in Stock Markets on Dividend Policies. International Business Management, 10: 4490-4497.