A RESEARCH PROJECT REPORT ON IMPACT OF DIVIDEND ON INVESTMENT DECISION Submitted In Partial Fulfillment Of The Requirement For The Award Of Degree Of MASTER OF BUSINESS ADMINISTRATION CENTER FOR MANAGEMENT STUDIES MADAN MOHAN MALAVIYA UNIVERSITY OF TECHNOLOGY GORAKHPUR

A
RESEARCH PROJECT REPORT
ON
IMPACT OF DIVIDEND ON INVESTMENT DECISION
Submitted In Partial Fulfillment Of The Requirement For The Award Of
Degree Of
MASTER OF BUSINESS ADMINISTRATION

CENTER FOR MANAGEMENT STUDIES
MADAN MOHAN MALAVIYA UNIVERSITY OF TECHNOLOGY
GORAKHPUR, U.P., INDIA
PROJECT GUIDE: SUBMITTED BY:
Mr. UGRASEN MOHINI SINGH
(ASSISTANT PROFESSOR) MBA 2nd YEAR (4th SEMESTER)
(IT & FINANCE)
ROLL NO.: 2016063115
SESSION: 2016-18
CERTIFICATION
This is to certify that the project report entitled “Impact of Dividend on Investment Decision” which is being submitted by “Mohini Singh (2016063115)” is being carried out from July 2017 to April 2018 under my supervision in the partial fulfillment for the award of degree of Master of Business Administration in IT and FINANCE from Madan Mohan Malaviya University of Technology (State University), Gorakhpur.

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Date:

(A. K. DANIEL) (UGRASEN)
(Coordinator) (Project Guide)
DECLARATION
I, hereby, declare that the project report entitled “IMPACT OF DIVIDEND ON INVESTMENT DECISION” is the outcome of my own work and the same has not been submitted to any college for the award.

DATE:
PLACE: GORAKHPUR (MOHINI SINGH)
M.B.A. 4th SEMESTER
(IT & FINANCE)
ROLL NO.: 2016063115
ACKNOWLEDGEMENT
Whenever a module of work is completed, there is always a source of inspiration. While completing this task, I realized from my inner core that Rome was not built in day.
First and foremost, I would like to pay my sincere gratitude to Mr. UGRASEN, Project Guide, for his valuable advice and guidance that helped me to complete this project successfully.

I owe special thanks to Dr. A. K. DANIEL, Coordinator of Centre for Management Studies, Madan Mohan Malaviya University of Technology, Gorakhpur, for his valuable cooperation and guidance in completing this project work.

Last but not the least I would like to pay my sincere gratitude to my parents whom I always find as my torch bearers.

MOHINI SINGH
M.B.A. 4th SEMESTER
(IT & FINANCE)
ROLL NO.: 2016063115
ABSTRACT
Investment decisions are considered as one of the crucial decisions on the survival and growth of firms. However, investment in firms can be influenced by several factors including dividend policy, firm size and financial leverage. Dividend policy is one of the key factors that influence many investment decisions.

The dividend policy of a firm accounts for how a firm divides its income between retained earnings and dividends. It states the policy measure of how much dividend to be declared, in what form should the dividend be declared- either as a cash dividend or as stock dividend.
Investment markets are becoming more risky and each and every passing day makes investors behave differently upon different market dynamics. This paper examine whether the dividend has any effect on investors’ decision making.
Keywords: Investment decisions, dividend policy, retained earnings, cash dividend, stock dividend.

TABLE OF CONTENTS
Chapter No. Title Page No.

ABSTRACT 5
1 INTRODUCTION 7
2 THEORETICAL BACKGROUND 9
3 LITERATURE REVIEW 11
4 RESEARCH OBJECTIVES 13
5 RESEARCH METHODOLOGY 14
6 DATA ANALYSIS AND INTERPRETATION 15
7 FINDINGS 23
8 SUGGESTIONS 24
9 CONCLUSION 25
REFERENCES 26
INTRODUCTION
Investment is the process performed by an investor of purchasing a stock, bond, and certificate of deposits, commodity, real estate or another investment vehicle with the expectations of earning a positive financial return over time. There are many reasons why people engaged in investment and different factors they are considering in investing such as stock prices, economic status, company background and even dividend payout. Individual investments behavior is concerned with choices about purchases of small amounts of securities for his or her own account. Investment decisions are often supported by decision tools. It is assumed that information structure and the factors in the market systematically influence individuals’ investment decisions as well as market outcomes.

Dividend policy is a major financing decision that involves with the payment to shareholders in return of their investments. Every firm operating in a given industry follows some sort of dividend payment pattern or dividend policy and obviously it is a financial indicator of the firm. Thus, demand of the firm’s share should to some extent, dependent on the firm’s dividend policy. Dividend policy is one of the most widely researched topics in the field of finance but the question is whether dividend policy affects stock prices still remain debatable among managers, policy makers and researchers for many years. Dividend policy is important for investors, managers, lenders and for other stakeholders. It is important for investors because investors consider dividends not only the source of income but also a way to assess the firms from investment points of view. It is the way of assessing whether the company could generate cash or not. Many investors like to watch the dividend yield, which is calculated as the annual dividend income per share divided by the current share price. The dividend yield measures the amount of income received in proportion to the share price. If a company has a low dividend yield compared to other companies in its sector, it can mean two things: (1) the share price is high because the market reckons the company has impressive prospects and isn’t overly worried about the company’s dividend payments, or (2) the company is in trouble and cannot afford to pay reasonable dividends. At the same time, however, a high dividend yield can signal a sick company with a depressed share price. Dividend yield is of little importance for growth companies because, retained earnings will be reinvested in expansion opportunities, giving shareholders profits in the form of capital gains. Lenders are also interested in the amount of dividend that a company declares, as more amounts is paid as dividend means less amount would be available to the company to pay-off their obligation. So, the study will investigate the relationship between dividend policy and its impact on market performance of the share.

The most important policies in corporate financing is the dividend policy. This is not only from the viewpoint of the company, but also from that of the shareholders, the consumers, the workers, the regulatory bodies and the government. The relative importance of this policy stems from the fact that it is a pivotal policy around which other financial policies rotate, hence central to the performance and valuation of firms. A firm’s dividend policy refers to its choice of whether to pay out cash to shareholders, in what fashion, and in what amount. The most obvious and important aspect of this policy is the firm’s decision whether to pay a cash dividend, how large the cash dividend should be, and how frequently it should be distributed. In a broader sense, dividend policy also encompasses decisions such as whether to distribute cash to investors via share repurchases or specially designated dividends rather than regular dividends, and whether to rely on stock rather than cash distributions. Non-traditional forms of dividend payments, especially share repurchases are much more commonly used today, and so the dividend decision is much more complex and difficult than in the past.

According to the Institute of Chartered Accountants of India, dividend is “a distribution to shareholders out of profits or reserves available for this purpose.
1. The term dividend refers to that portion of profit (after tax) which is distributed among the owners / shareholders of the firm.
2. Dividend may be defined as the return that a shareholder gets from the company, out of its profits, on his shareholdings.

THEORETICAL BACKGROUND
Generally, financial scholars are divided into two camps when discussing dividend policy and its impact on the value of a firm. On one side, researchers believe there is no relationship between dividends and a firm’s value (irrelevance theory), while on the other side, scholars claim there is a correlation (relevance theory). Among this latter group, there are also two factions, one which supposes that the relationship is positive, and one which considers it to be negative.
IRRELEVANCE THEORY:
In 1961, two Nobel laureates, Merton Miller and Franco Modigliani (M;M), proposed a theory which, more than 50 years on, remains one of the most respected in the canon of financial literature (Baker, 2009). They argued that under the ideal circumstances of a perfect capital market, rational investor behavior, and perfect certainty, the dividend payment is unrelated to a firm’s value. In other words, the irrelevance theory assumes that in an ideal business world there is no conflict of interest between managers and shareholders, and that all information is free and there is equal access for all investors. Furthermore, under ideal circumstances there are no transaction costs when buying and selling shares, and no differences between the tax rates for dividends and the tax rates for capital gains. In this model, dividend policy follows investment decisions which become so-called residual dividends policy. As a consequence, dividends have no effect on the value of a firm.
RELEVANCE THEORIES:
BIRD IN HAND THEORY:
The logic of this theory is that in light of uncertainty in the business environment, investors always prefer to have current dividends (a bird in the hand) to capital gains (TWO in the bush) because capital gains relate to the future which is much riskier than present dividends. Hence, investors will be willing to pay a higher price for firms with dividend payments and as a result, maximize the value of the firm (Gordon, 1963; Walter, 1963).
SIGNALING (ASYMMETRIC INFORMATION) THEORY:
The essence of signaling theory is that a firm’s management is likely to have private knowledge about the current and future situation of their company than outsiders will have (asymmetric information). Managers use dividends as a device to deliver useful information to the financial market about present and future profit and growth of their firm (John and Williams, 1985). Lintner’s (1956), best known research revealed that managers are concerned about a signal of profit distribution over time. Bhattacharya (1979) suggests that dividend payouts may function as a signal of a company’s financial health, with an increase in dividends indicating that managers expect their business to have a higher cash flow in the future. As consequences, a higher value is signaled by higher dividends.
AGENCY THEORY:
One of the assumptions of irrelevance theory is that under perfect market conditions there is no conflict of interest between corporate insiders (managers) and outside shareholders. However, in practice this assumption is doubtful. According to agency theory, unless earnings are distributed to outside shareholders, they might be diverted by managers for personal utility or committed to unprofitable ventures that provide private benefit for managers. As a result, agency cost implies that shareholders have a preference for dividends over profit, and firms with generous dividend payments will improve their value by decreasing the amount of funds available to managers (Rozeff, 1982; La Porta et al., 2000).
TAX RELATED THEORIES:
These theories were developed by Brennan (1970) and Litzenberger and Ramaswamy (1979). They argue that investors who receive appropriate tax treatment may prefer shares either with low dividends or with no dividends at all. Dividends are taxed immediately and at a higher rate than capital gains, and as a consequence high dividend payouts would increase the shareholder’s taxable income. Fixed investors, therefore, prefer firms which retain profits rather than distribute them as dividends. Black and Scholes (1974) revealed that investors calculate the trade-off between high dividend payments benefit and capital gains, and that investors tend to choose firms that have a dividends strategy that meets their personal requirements.

LITERATURE REVIEW
The question that holds utmost importance in finance literature is whether a firm’s dividend policy has any impact on firm value. It might be astonishing to realize that the dividend policy has been a contentious issue over the half century.
Grullon et al. (2002) elucidated that the dividend increasing firms do not augment their investments and led a decrease in profitability in the years following the change in dividend. Inversely, market shows a positive reaction by largest decline in the systematic risk. In the long run, the dividend increasing firms also experience the largest increase in price in following years and value of firm effect positively.
Baker and Wurgler (2004) explicated the catering theory of dividends in this paper. Miller and Modigiliani (1961) divulged that dividend policy does not determine the value of firm assuming frictionless market. The research postulated that dividends enjoy a strong relationship with value of shares which is antithetical to MM (1961) theory of dividend irrelevance.
Farsio et al. (2004) used co-integration and granger causality to identify short run and long run relationship between earnings and dividend using co-integration. This study supported the view that higher dividend payouts signaled an increase in future earnings. This study further divulged there is no significant relationship in earnings and dividend in the long run.
Gosh (2004) used co-integration to determine the relationship between earnings and dividend. Results divulged that Earnings per Share (EPS) and Dividend per Share (DPS) share a long-run relationship. Lead-lag relation is also observed between EPS and DPS.
Sarig (2004) conducted a time-series analysis for interaction among payout policies and investment policies. VAR model of earnings, investments, total payout, and the split of the payout between shares repurchases and dividends considering tax changes were used. The result of the study elucidated that investment decisions direct payout policies. The author also explained that increase in total payout is linked with long-term increase in earnings.
Baker and Smith (2006) investigated the sample of 309 firms to analyze behavior consistency with residual dividend policy and also to scrutinize how their competitors place their dividend policy. It is established that model firms are more conventional to uphold a lasting dividend ratio as compared to their counterparts. The sample firms sustain their disbursement ratio by adopting “modified” residual policy. We extract that firms focus on residual dividend policy after considering the investment policy.
DeAngelo et al. (2006) explored that firms pay high dividend when business retains major part of earning. The purpose of the study was to examine the life-cycle theory of dividend and results corroborated the life cycle theory, in which internal and external finance define the firm’s position. They concluded the high significant relationship between dividend payout and earned/contributed capital mix by using regression analysis subject to controlling total equity, cash balances, firm size, growth, profitability and dividend history.
Magni (2007) discussed the studies conducted by DeAngelo and DeAngelo (2006) which criticized the study by MM (1961). The results of this study did not support the results of both of the previous studies but because retention or non-retention is not relevant to this decision so he suggested that it is the rate of return which affects the investments decisions or dividend irrelevance.
Handley (2008) attempted to compare the MM dividend irrelevance theorem with DD dividend relevance theorem and notes that only the dividend policy is considered by M and M rather the total payout including dividend payout and share repurchases is considered by DD. He suggested that payout policy is not irrelevant in perfect competition.
Similar to our study Skinner (2008) analyzed the relationship between earnings and payout over the last three decades. He suggested that relationship between earnings and total payout is stronger than relationship between dividend and earnings. The study proved a strong relationship between earnings and repurchase and results suggested that repurchase was going to become key part of payouts.
Wang (2010) examined the casual relationship among financing, investing, dividend policy and corporate performance analyzing the data of Taiwan and Chinese High-tech firms during the period of 2000 – 2007. The researcher found a positive relationship of investment with firm performance in Taiwan firms. However, financing decisions had positive relationship with investment in Chinese firms.
Chazi (2011) conducted research on emerging markets of UAE. The researcher conducted examination and interviews to look into dividend policy and shares repurchase and discovered that the finance managers are disinclined to cut in dividends. It is explained that dividends are considered as the residual decision after making the investment decisions. It is contribution towards the studies conducted by Brav et al. (2005) and Linter (1956).

RESEARCH OBJECTIVES
To examine whether there is any relationship between dividend policy and investment decision.

To check the impact of dividend on market performance of the share.

RESEARCH GAP
Many of the researchers have conducted on this topic. Some of them supported that investment decisions and dividends are interdependent, some says that both are independent while some says that investment cause dividends and not vice versa.

RESEARCH METHODOLOGY
RESEARCH DESIGN: Descriptive
RESEARCH TECHNIQUE: Quantitative
DATA COLLECTION: Secondary data
SAMPLE SELECTION TECHNIQUE: Random Sampling
SAMPLE SIZE: 2 public sector banks and 2 private sector banks
VARIABLES:
Earnings per Share (EPS): This ratio is one of the important variables affecting the stock price which has been used by dividing the amount of the firm’s earnings after tax by its number of stocks.
Dividend Per Share (DPS): The amount of cash dividend which, after being approved in regular meetings, is granted to stockholders.

Dividend Policy: The policy which is adopted by the firm in determining the amount of payment to stockholders and it has been operated through DPS/EPS ratio.

Dividend Payout Ratio: It measures the relationship between dividends and earnings. What percentage shares of dividend is to be distributed from profit.

It is to be calculated, D/P Ratio = (Dividend per Share /Earnings per Share) * 100
Share price: It is the price of an individual share in a company.
SOURCES OF DATA:
The data for this study are secondary data generated from annual reports and accounts of randomly selected public sector banks and private sector banks quoted on the National Stock Exchange of India. This was for an eight year period, covering the period 2009 to 2017.

DATA ANALYSIS:
Data collected is analyzed using correlation analysis in Microsoft Excel 2013.

DATA ANALYSIS AND INTERPRETATION
PUBLIC SECTOR BANKS
1. STATE BANK OF INDIA
YEAR EPS(Rs.) DPS(Rs.) DPR (%) SHARE PRICE (Rs.)*
2009 14.37 2.90 20.19 106.71
2010 14.43 3.00 20.78 207.82
2011 13.01 3.00 23.05 276.53
2012 18.43 3.50 20.06 209.64
2013 21.00 4.15 20.12 207.27
2014 15.67 3.00 20.56 191.77
2015 17.55 3.50 19.51 267.05
2016 12.98 2.60 20.28 194.25
Source: SBI Corporate Website
*Figures for the years prior to 2013-2014 have been adjusted to reflect the effect of split of equity shares from nominal value of Rs 10 each into ten equity shares of nominal value of Re 1 each.

CORRELATION ANALYSIS
EPS DPS DPR SHARE PRICE
EPS 1 DPS 0.956456027 1 DPR -0.52756405 -0.31515 1 SHARE PRICE 0.096673653 0.258906 0.384152 1
INTERPRETATION: For Pearson correlation coefficient, where 1 is total positive correlation, 0 is no correlation, and ?1 is total negative correlation. So, it can be stated that Dividend Payout Ratio is negatively correlated with EPS while positively with Share Price in case of SBI.

DESCRIPTIVE STATISTICS OF PARAMETERS
EPS DPS DPR SHARE PRICE
Mean 15.914 Mean 3.206 Mean 20.568 Mean 207.63
Standard Deviation 2.866 Standard Deviation 0.485 Standard Deviation 1.069 Standard Deviation 51.958
Minimum 12.82 Minimum 2.6 Minimum 19.51 Minimum 106.71
Maximum 21.006 Maximum 4.15 Maximum 23.05 Maximum 276.53

INTERPRETATION: The EPS of SBI shows an interesting trend in the year 2011 but it drops in the year 2012 and becomes almost constant. The DPS rises up to Rs. 4.15 in the year 2013 but shows a decreasing trend afterwards. The dividend payout ratio lies in the range of 19.51 percent to 23.05 percent during eight years of study.

INTERPRETATION: The share price of SBI has shown a fluctuating trend from 2013 to 2017, and it lies in the range of 191.77 and 293.4
2. UNION BANK OF INDIA
YEAR EPS(Rs.) DPS(Rs.) DPR (%) SHARE PRICE (Rs.)
2009 34.18 5.00 14.62 139.66
2010 41.08 5.50 13.38 174.37
2011 39.71 8.00 20.14 211.31
2012 34.07 8.00 23.48 235.91
2013 38.93 8.00 20.54 262.90
2014 27.99 4.00 14.29 268.20
2015 28.05 6.00 21.39 288.40
2016 20.42 1.95 9.54 295.44
Source: Union Bank of India Website
CORRELATION ANALYSIS
EPS DPS DPR SHARE PRICE
EPS 1 DPS 0.7641903 1 DPR 0.42301067 0.894736 1 SHARE PRICE -0.642451207 -0.20686 0.090242 1
INTERPRETATION: For Pearson correlation coefficient, where 1 is total positive correlation, 0 is no correlation, and ?1 is total negative correlation. So, it can be stated that Dividend Payout Ratio is positively correlated with EPS as well as Share Price in case of Union Bank of India.

DESCRIPTIVE STATISTICS OF PARAMETERS
EPS DPS DPR SHARE PRICE 
Mean 33.053 Mean 5.806 Mean 17.172 Mean 234.523
Standard Deviation 7.129 Standard Deviation 2.182 Standard Deviation 4.857 Standard Deviation 55.691
Minimum 20.42 Minimum 1.95 Minimum 9.54 Minimum 139.66
Maximum 41.08 Maximum 8 Maximum 23.48 Maximum 295.44

INTERPRETATION: The EPS and DPS of Union Bank of India shows a fluctuating trend. The dividend payout ratio lies in the range of 0 percent to 22.22 percent during five years of study.

INTERPRETATION: The share price of Union Bank of India has shown an increasing trend from 2013 to 2015, but it has started to decrease in 2016 and still getting decreased. It lies in the range of 264.37 and 288.01
PRIVATE SECTOR BANKS
1. HDFC BANK
YEAR EPS (Rs.) DPS (Rs.) DPR (%) SHARE PRICE (Rs.)*
2009 10.57 2.00 22.17 194.68
2010 13.51 2.40 21.72 386.70
2011 17.00 3.30 22.72 469.17
2012 22.11 4.30 22.70 519.85
2013 28.49 5.50 22.77 625.35
2014 35.47 6.85 22.68 748.80
2015 42.15 8.00 23.62 1022.70
2016 48.84 9.50 23.51 1071.15
Source: HDFC Bank Website
*Figures for the years prior to 2011-2012 have been adjusted to reflect the effect of split of equity shares from nominal value of Rs 10 each into five equity shares of nominal value of Rs 2 each.

CORRELATION ANALYSIS
EPS DPS DPR SHARE PRICE
EPS 1 DPS 0.999456 1 DPR 0.873257 0.877874 1 SHARE PRICE 0.982732 0.978997 0.886026 1
INTERPRETATION: For Pearson correlation coefficient, where 1 is total positive correlation, 0 is no correlation, and ?1 is total negative correlation. So, it can be stated that Dividend Payout Ratio is positively correlated with EPS as well as Share Price in case of HDFC Bank.

DESCRIPTIVE STATISTICS OF PARAMETERS
EPS DPS DPR SHARE PRICE  
Mean 27.267 Mean 5.231 Mean 22.736 Mean 629.8
Standard Deviation 13.916 Standard Deviation 2.715 Standard Deviation 0.625 Standard Deviation 304.644
Minimum 10.57 Minimum 2 Minimum 21.72 Minimum 194.68
Maximum 48.84 Maximum 9.5 Maximum 23.62 Maximum 1071.15

INTERPRETATION: The EPS and DPS of HDFC Bank shows an increasing trend from 2013 to 2017. The dividend payout ratio is almost constant and lies in the range of 0 percent to 19.62 percent during five years of study.

INTERPRETATION: The share price of HDFC Bank has shown an increasing trend from 2013 to 2017. It lies in the range of 625.35 and 1442.55
2. AXIS BANK
YEAR EPS (Rs.) DPS (Rs.) DPR (%) SHARE PRICE (RS.)*
2009 10.12 2.00 19.76 56.90
2010 13.16 2.40 18.23 79.19
2011 16.59 2.80 16.87 92.55
2012 20.59 3.20 15.54 110.39
2013 23.93 3.60 16.29 141.50
2014 26.51 4.00 15.11 162.69
2015 31.18 4.60 14.78 188.47
2016 34.59 5.00 14.48 223.12
Source: Axis Bank Website
*Figures for the years prior to 2014-2015 have been adjusted to reflect the effect of split of equity shares from nominal value of Rs 10 each into five equity shares of nominal value of Rs 2 each.

CORRELATION ANALYSIS
EPS DPS DPR SHARE PRICE
EPS 1 DPS 0.99906 1 DPR -0.92786 -0.92142 1 SHARE PRICE 0.993548 0.995658 -0.89121 1
INTERPRETATION: For Pearson correlation coefficient, where 1 is total positive correlation, 0 is no correlation, and ?1 is total negative correlation. So, it can be stated that Dividend Payout Ratio is negatively correlated with EPS while positively with Share Price in case of Axis Bank.

DESCRIPTIVE STATISTICS OF PARAMETERS
EPS DPS DPR SHARE PRICE
Mean 22.083 Mean 3.45 Mean 16.382 Mean 131.851
Standard Deviation 8.596 Standard Deviation 1.051 Standard Deviation 1.835 Standard Deviation 57.291
Minimum 10.12 Minimum 2 Minimum 14.48 Minimum 56.9
Maximum 34.59 Maximum 5 Maximum 19.76 Maximum 223.12

INTERPRETATION: The EPS and DPS of Axis Bank shows an increasing trend but the EPS has decreased in 2017. The dividend payout ratio lies in the range of 14.48 percent to 32.54 percent during five years of study.

INTERPRETATION: The share price of Axis Bank has shown an increasing trend from 2013 to 2017 even after decrease in EPS and lies in the range of 141.5 and 232.83
FINDINGS
Dividend policy is very important in the management of company’s earnings. So decisions related to dividend policy have a significant effect on credit standing of the firm, its share prices and its future growth.
The valuation of any company depends on its earnings. Due to decentralization of ownership and management in company’s organizational structure, it is obvious to decide the dividend policy in which the trusts of shareholders are maintained.
The study reveals the correlation of different variables such as Earning per share, Dividend per share, share price with dividend payout. Remarkable observations were found among these variables for different companies in banking industry. Apart from this, the study also shows how the fluctuations in dividend payout ratio have taken place, year by year due to variation in different independent variables.
SUGGESTIONS
Dividend policy is set largely at the discretion of the management. One of the major important factor management has to consider is shareholders’ interest.
Since reduction in dividend may create a negative impression in the mind of shareholders which will affect the credit position of the company so it is suggested to the companies that dividend raised should not be reduced.

Every year declaration of dividends is necessary. As shareholders’ are the owners of the company and risk is directly associated with the ownership. As shareholders bear the risk, so they expect a fair return in form of dividend. So it is suggested to the companies to provide fair dividends to the shareholders for better investment options and goodwill of the company.
Dividend policy should be decided keeping in mind the growth needs of the firm. A high dividend payout reduces firm’s access to retained earnings, the cheapest source of capital. For that reason management may prefer lower dividend payout ratios, especially in growth firms as the retained funds would be required for expansion purposes.
CONCLUSION
The companies selected are observed to have continuous dividend payment records and general trend shows that the dividends have either remained constant or increased however instances of decline in dividends have been very rare.
Moreover, knowing the significance of least related variable on dividend payout of selected companies, it is observed that though in many instances results do support theoretical expectations about dividend policy, there are number of cases where the results are inconsistent with theoretical aspects.
The study reveals that in most of the companies least related variable do not have influence on dividend payout and in some of the companies least related variable do have influence on dividend payout.
It also reveals that each firms though belonging to the same industry and facing same business environment has its own and unique dividend policy which is due to company-specific needs and factors.
References:
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