Study on the Relationship Between Dividend, Business Cycle, Institutional Investor and Stock Risk

Abstract

Investors in Taiwan mostly use dividends and business cycles as their main indicators of judgment when making investment decisions, and they pay less attention to individual stock risks. Recently, the proportion of corporate investment in the Taiwan stock market has gradually surpassed that of individual investors. Therefore, this paper analyzes the stock price risk of 200 listed companies in Taiwan that issued dividends every year and all institutional investors hold shares from 2008 to 2014. The individual risk is measured by the standard deviation and the market risk is measured by the beta coefficient. The impact of the dividend, business cycle, and institutional investors’ shareholding on stock risk is discussed. The empirical results found that (1) Dividends and institutional investors’ shareholding are significantly positively correlated with individual risks. (2) The business cycle is negatively correlated with individual risks. (3) The relationship between dividends, business cycle, the shareholding of institutional investors, and market risks is not obvious.