Dividend Versus Capital Gain and Investor Preference:A Case Study on Dhaka Stock Exchange

Rumana Haque, Syed M. Fuad, Md. Sultan Mahamud


This paper explores investors’ preference for capital gain and dividend payment. The questionnaire results show that overall, investors prefer capital gain over cash dividend. The results from the regression also demonstrate that all demographic variables and investor characteristic, specifically education level, age, investment amount and investment income, are positively related to an investors tendency to prefer dividend payment, with investment income and age having the strongest impact. The results from this test reconfirm that investors with larger sums tend to be more risk averse. Moreover, the results from the primary data also reveal that investor preferences are compatible and consistent with traditional theories including the Birds-in-the-Hand Theory, Information Signaling Theory, Tax Preference Theory and Clientele Effect Theory.

Keywords: dividend payment, capital gain, demographic characteristics, Information Signaling Theory,

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ISSN (Paper)2222-1697 ISSN (Online)2222-2847

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