This study investigates the extent to which dividend policy shapes the share prices of pharmaceutical and chemical companies traded on the Dhaka Stock Exchange (DSE). Panel data from 14 A-category companies for the period 2018–2022 have been used. The analysis incorporates inferential statistical techniques, including Pearson correlation, Fixed Effect Model, Pooled OLS Model, and Random Effect Model. The study evaluates the impact and significance of both cash dividends and stock dividends on share prices, while controlling for key financial indicators such as earnings per share, net asset value, dividend yield, and the price–earnings ratio. Model selection was guided by the Redundant Fixed Effects Test (Likelihood Ratio) and the Hausman Test, whose outcomes collectively identified the Random Effects Model as the most appropriate estimator for this dataset. Findings from both the correlation analysis and the Random Effects estimation reveal that cash dividends exert a significant positive influence on stock prices. Conversely, stock dividends show a positive but statistically insignificant effect. Additionally, the results suggest that share prices are significantly and positively associated with net asset value and earnings per share. Overall, the findings extend the scholarly conversation on dividend policy by offering meaningful insights that can help investors and policymakers make more thoughtful and informed decisions about dividend practices.
Publication Date: 2026-06-19