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- Title
The Determinants of Dividend Policy in Indian Corporate Sector.
- Authors
Garg, Mahesh Chand; Bhargaw, Vikas
- Abstract
The present paper is an attempt to examine the determinants of dividend policy of Indian corporate sector for a duration of 12 years from 2002-03 to 2013-14. The sample contains 200 companies out of listed companies in the BSE-500 index at Bombay Stock Exchange which paid dividend for at least 10 years out of 12 financial years. The well-known multiple regression analysis-based dividend model, namely, Lintner's (1956) dividend model is used to test the relationship among the study variables. The empirical results suggest that current year profits after tax and lagged dividends are the most important factors that affect positively the current dividend policy of the companies, which demonstrates the suitability of Lintner's dividend model for determining the dividend behavior of the sample companies. In order to provide a comprehensive analysis of the determinants of dividend policy, additional explanatory variables such as investment demand, flow of net debt, interest payment, and change in sales have also been included along with the Lintner's dividend model, and it is found that none of these additional variables are significant determining factors of dividend decision of Indian corporate sector. On the practical side, the study holds the argument that information related to profitability and lagged dividend would help the firms to focus on the major factors concerning the payment of dividend by Indian corporate sector.
- Publication
IUP Journal of Accounting Research & Audit Practices, 2019, Vol 18, Issue 1, p31
- ISSN
0972-690X
- Publication type
Academic Journal