Research demonstrates that dividend policy significantly affects share price volatility in industrial firms, suggesting that debt ratio moderates this relationship.
Key Points
A 1% increase in dividend yield reduces share price volatility by 0.42%, improving market stability.
Higher payout ratios are associated with approximately a 0.31% decrease in volatility, implying effective financial strategies.
The interaction between dividend yield and debt ratio weakens dividends' stabilizing effect in highly leveraged firms.
Findings from a balanced panel dataset of 64 Jordanian industrial firms emphasize the need for balanced financial policies.