IMPACT OF DIVIDEND AND EARNINGS ON STOCK PRICE

The study assessed the effects of dividend and earnings on stock price behaviour in Indian banking sector. Banking sector-specific study on the subject remains underrepresented in spite of the importance of the sector in the nation?s financial system. The sample period spans from 2008 to 2018 and comprises of annual stock prices, dividend and earnings per share of 20 banking companies. The pooled least square model, fixed effect model, random effect model and Hausman test were employed. The study found that Dividend per share and Earning per share have a significant positive effect on the stock prices It implied that regular dividend payment is a significant factor that enhances shareholders wealth in banking firms. Based on the findings of the study, bank management should be favorably dispose to payment of dividend to the shareholders because of its impact on the maximization of wealth which is the most important objective of the firm.