How Do Stock Prices React to the Growth of Earnings and Interim Dividends? An Analysis of Selected Companies of the Pakistan Stock Exchange

Authors: Resham Iftikhar, Ibtisam Khalid, Shazeena

Earnings’ growth leads to the payment of dividends and a steadier and less risky growth results in interim dividends. The study explores the earning growth influence and interim dividend on the stock prices within Pakistan Stock Exchange, KSE-30 index specifically. This unique aspect focusses on the Pakistan market, contributing to the novelty how growth earnings and interim dividends influences stock prices. Methodologically, this study used panel data analysis to ensure the strength of model. Considering the nature of this causal research, secondary data was used. Quarterly data of the companies in the KSE-30 Index was collected from PSX Data Portal. This study highlighted the impact of two company fundamentals on stock prices, providing the investors to keep an eye on them. Panel data analysis was made and all diagnostics, including the tests for normality, linearity, multicollinearity, auto regression, and heteroskedasticity has applied before applying the model. The model has selected by applying the LM test and then Hausman’s test with the findings of the other researchers to establish validity. This study highlights the main factors in shaping the behavior of stock market and sentiments of investors and contributing a deep understanding of market strategic investment approach and dynamics. The implication of the study covers the range of academic disclosure and giving actionable insight of navigating investor in Pakistan Stock Exchange by highlighting the vital role of monitoring earnings with interim dividends, how investors are equipped with the tools of informed decision.