International Journal of Academic Multidisciplinary Research (IJAMR)   Year: 2020 | Volume: 4 | Issue: 5 | Page No.: 47-56 The Moderating Effect of Bird-In-Hand Theory on Dividend Policy and Stock Price Volatility: Evidence from Malaysian Non-Financial Sector Rabia Qammar, Rana Zain Ul Abidin Abstract: Dividend policy and stock price volatility linkage is debateable issue in the capital market literature. Due to inconclusive findings, there is a worthy scope to investigate this issue, it is more focused in emerging markets due to highly volatile in nature. Therefore, this study aims to scrutinize the effect of Bird-in-Hand theory on dividend policy and stock price volatility in Bursa Malaysia for clear picture. This study measured stock price volatility by Parkinson formula. The cost of capital and rate of return were considered as proxies of Bird-in-Hand theory. This study utilized panel regression model for data analysis based on the sample of 548 non-financial listed companies in Bursa Malaysia from 2011 to 2018. These findings suggested dividend policy as the main determinant of stock price volatility. This study also found significant moderating effect of cost of capital on the relationship between dividend pay-out ratio and stock price volatility. The implications of this research could utilized by investors, policy makers, and researchers to reduce the price volatility in Bursa Malaysia.