Determinants of Stock Price Movements: Evidence from Chittagong Stock Exchange, Bangladesh

  • Mohammed Syedul Islam Department of Business Administration International Islamic University Chittagong
  • Evana Nusrat Dooty Department of Business Administration International Islamic University Chittagong
Keywords: Bangladesh, Chittagong Stock Exchange, dividend, retained earnings, share price.

Abstract

Stock market plays a vital role in the economic development of an economy. It bridges up between savers and real manufacturers by raising funds from investors to companies. This process was broken down due to the 2010-2011 stock market crash in Bangladesh. Though the determinants of stock price have been settled empirically, the current paper aims to reexamine the relationship between stock price, dividend and retained earnings of 29 listed banks of Chittagong Stock Exchange, in the post-crash period. Cross-sectional data were collected from secondary sources. Using linear regression method, the study found that both, dividend and retained earnings of sample banks have strong influence over the stock price, though there was moderate explanatory power of those variables. After reviewing the causes of crisis 2010-2011, this study suggests the following: to control price manipulation, to publish proper financial statement, regulate the dividend policy, to ensure sufficient knowledge among investors, recruit technical expert and ensure proper settlement for transactions,prevent crises of stock market against speculation etc.

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Published
2015-06-19