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Factors Influencing Dividend Policy Decisions of Corporate India

12/2004;

ABSTRACT

The present study analyses the results 2001 survey of 81 CFOs of the bt-500 companies and her most valuable PSUs in India to find out the determinants of the dividend policy decisions of the corporate India. It uses factor analytic framework on the CFOs' responses to capture the determinants of dividend policy of corporate India. Most of the firms have target dividend payout ratio and dividend changes follow shift in the long-term sustainable earnings. The findings on dividend policy are in agreement with Lintner's study on dividend policy. The dividend policy is used as signaling mechanism to convey information on the present and future prospects of the firm and thus affects its market value. The dividend policy is designed after taking into consideration the investors' preference for dividends and clientele effect.

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    • "They explained investors' preference for dividends in the presence of taxes. Results of the study conducted by Anand (2008) shows that dividends provide signal about companys' success and also affect stock prices. Capstaff, Klaeboe, & Marshall (2004) studied the signalling effect of dividend announcement on stock prices of Oslo Stock Exchange (OSE). "
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    ABSTRACT: Dividend policy is widely researched topic in the field of finance but still it remains a mystery to decide whether dividend policy affects the Stock Prices or not. This paper is an attempt to explain the effect of dividend policy on Stock Prices after controlling the variables like Earnings per Share, Profit after Tax and Return on Equity. A sample of 55 companies listed at KSE-100 Index is selected for the period of 2001-2010. Fixed and random effect models are applied on panel data to determine the relation between dividend policy and stock prices. Results indicate that Dividend Yield, Earnings per Share, Return on Equity and Profit after Tax are positively related to stock prices while Retention Ratio have negative relation with Stock Prices and significantly explains the variations in the stock market prices. These results further elaborates dividend policy is important as it provides signal about the success of the company.
    Preview · Article · Nov 2011 · International Research Journal of Finance and Economics
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    • "For s&p firms, in contrast, option deductions do not affect marginal tax rates to a large degree. Anand (2004) analyzed most valuable public sector undertakings (psus) in India to find out the determinants of the dp decisions of the corporate firms in India, and revealed that the findings are in agreement with Lintner's study on dp. The dp is used as a signaling mechanism to convey information on the present and future prospects of the firm, and thus affects its market value. "
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    ABSTRACT: The objective of this paper is to examine the association between the Corporate Leverage (CL) and the Dividend Policy (DP) of firms across industries in India in respect of Size of Corporate Firms. The investigation is conducted on a panel sample of 73 firms across industries [Cement, Chemical and Fertilizer, IT, Oil and Gas, Pharmaceutical, Shipping, and Textiles], which listed their shares in National Stock Exchange (NSE) in India for the period 1996–2007. The impacts of Capital Structure (CS) variables (leverage) on DP measures – dividend payout (Net dividend paid/net income) in the presence of some basic fundamental variables are considered to be the determinants of DP, using the Multiple Regression Technique (OLS method). The results of the cross-sectional ols Model for the selected sample firms under various sectors show that there is a significant effect of selected independent variables. Therefore, this study proves that the DP of Small Size, Medium Size, Large Size, and Overall Corporate Firms across industries in India is dependent on the level of debt in CS.
    Preview · Article · Jan 2010
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    • "Grullon, Michaely and Swaminathan (2002) state that firms increasing dividends experience also a significant decline in their return on assets, which indicates a decline in systematic risk. Anand (2004) results reveal that most of the firms that have target dividend payout ratio and dividend changes follow shift in the longterm sustainable earnings. "
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    ABSTRACT: We provide here a study of Pakistani Firms registered on the Karachi Stock Markets. We have examined many determinant variables of the dividend policy to shed light on the dividend trends of firms in Pakistan as an emerging market. Our sample is comprised of 108 companies that have been listed on Karachi stock exchange during 1999-2004. The starting point in our research has been an observation that most of the Pakistani firms were reluctant in dividend payments. Mostly, firms either did not pay dividends or their dividend per share ranged between 0 - 2.5 Rupees per share. We find that the non-financial sector has higher average dividend payout than the financial sector. Sector wise analysis indicates that Oil & Gas Exploration, Oil & Gas Marketing and Power Generation & Distribution Sectors have higher average dividend payments. We find evidence that former dividends play a major role in determining current dividends. For the whole sample, we find that firms with greater profitability have higher dividend payouts. We also find that investment opportunities, liquidity and leverage are negatively related to dividend payout for the whole sample. We conclude from the research that when non-financial firms invest more in fixed assets their dividend payout is negatively affected by that. We find also that larger financial firms pay larger amount of dividends. But, when these firms have investment opportunities they retain profits.
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