What Factors Drive the Dividend Policy of Indian Companies?
DOI:
https://doi.org/10.17010/ijrcm/2019/v6/i3/148882Keywords:
Dividend Decision
, Payout Policy, Regression Analysis, Profitability, Leverage, Indian Companies.JEL Classification
, G3, G30, G35.Paper Submission Date
, August 1, 2019, Paper Sent Back for Revision, August 25, Paper Acceptance Date, September 1, 2019.Abstract
Dividend policy of companies is one of the most provocative issues of theoretical finance. The aim of this paper was to scrutinize the firm-level dynamics persuading the dividend decisions of companies in a developing economy. Twelve-year panel data from 2006-2018 of BSE-500 index were used for this study. Results revealed that most of the variables lying in the categories of profitability, risk, size, ownership, and financial leverage were found to be significant determinants of dividend policies of firms. However, sales growth and liquidity were not found to have a significant effect on dividend decision of the companies. The decision regarding the dividend policy is very crucial for the firms as it outlines the method, type, and frequency of dividend distribution. This present study adds to the prevailing literature by assessing the impact of 21 variables together on dividend policy of the firms. It provides a comprehensive framework that can be useful to companies, investors, and regulators of companies in India.Downloads
Downloads
Published
How to Cite
Issue
Section
References
Allen, F., & Michaely, R. (1995). Dividend Policy. In, Handbook in OR & MS. Elsevier Science, 9, 793-836.
Bhayani, S. J. (2008). Dividend policy behaviour in Indian capital market: A study of BSE-30 companies. DIAS Technology Review, 4 (1) , 30-39.
Black, F. (1976). The dividend puzzle. Journal of Portfolio Management, 2 (2), 5-8.
Brahmaiah, B., Srinivasan, P., & Sangeetha, R. (2018). Determinants of corporate dividend policy in India: A dynamic panel data analysis. Academy of Accounting & Financial Studies Journal, 22 (2), 1-13.
Brealey, R.A., & Myers, S.C. (2003). Principles of corporate finance (7th ed.). New York : McGraw-Hill.
Dang, H. N., Ha, N. V., &Binh, D. T. (2018). Factors influencing the dividend policy of Vietnamese enterprises. Asian Journal of Finance & Accounting, 10 (2), 16-29. http://dx.doi.org/10.5296/ajfa.v10i2.13651
Denis, D. J., &Osobov, I. (2008). Why do firms pay dividends ? International evidence on the determinants of divided policy. Journal of Financial Economics, 89 (1), 62-82.
Gupta, A., & Banga, C. (2010). The determinants of corporate dividend policy. Decision, 37(8), 63-77.
Kania, S. L., & Bacon, F.W. (2005). What factors motivate the corporate dividenddecision ? ASBBSE E-Journal, 1 (1), 97-107.
Labhane, N. B., & Das, R. C. (2015). Determinants of dividend payout ratio: Evidence from Indian companies. Business and Economic Research, 5(2), 217-241. http://dx.doi.org/10.5296/ber. v5i2.8154
Lease, R. C., John, K., Kalay, A., Loewenstein, U., &Sarig, O. H. (2000). Dividend policy: Its impact on firm value. Boston, MA : Harvard Business School Press.
Lintner, J. (1956). Distribution of incomes of corporations among dividends, retained earnings and taxes. The American Economic Review, 46(2), 97-113.
Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth and the valuation of shares. The Journal of Business, 34(4), 411-433.
Myers, M., & Bacon, F. (2004). The determinants of corporate dividend policy. Academy of Accounting and Financial Studies Journal, 8(3), 1-12.
Nadig, A. (2017). Impact of interim dividend announcements on banking stock prices in India. Indian Journal of Finance, 11 (7), 50-64. http://dx.doi.org/10.17010/ijf/2017/v11i7/116567
Narasimhan, M.S., & Asha, C. (1997). Implications of dividend tax on corporate financial policies. The ICFAI Journal of Applied Finance, 3(2), 1-28.
Narasimhan, M.S., & Vijayalakshmi, S. (2002). Impact of agency cost on leverage and dividend policy. The ICFAI Journal of Applied Finance, 8(2), 16-25.
Nuredin, M. (2012). Determinants of dividend policy of insurance companies in Ethiopia (Doctoral Dissertation). Addis Ababa University, Ethiopia.
Pandey, V. S. (2017). Do dividend changes have informational content to signal the market? Evidence from the Indian Stock Market. Indian Journal of Research in Capital Markets, 4(1), 42-60. http://dx.doi.org/10.17010/ijrcm/2017/v4/i1/112886
Velmurugan, R. (2015). Determinants of dividend in Indian fertilizer industry. Journal of Progressive Research in Social Sciences, 1(1), 1-4.
Yarram, S. R. (2002). Dividend policy of Indian corporate firms: An analysis of trends and determinants. https://dx.doi.org/10.2139/ssrn.377180
