The relationship between dividend, business cycle, institutional investor and stock risk

Abstract

Investors usually pay more attention to stock dividend payouts and business cycle but less to investment risk. Therefore, volatility and beta, two widely used risk measures of stocks, are used to explore their relationships with dividends, business cycle and institutional ownership. We sampled 200 listed firms which have continuous records of dividend payouts and are held by institutional investors from 2008 to 2014 in Taiwan Stock market. The results show that: (1) dividend and the share ratio of institutional investors have significant positive effect on individual stock risk, (2) the relationship between business cycle and individual stock risk is negative and (3) the effect of dividend, business cycle and share ratio of institutional investor on market risk is insignificant.