A Study on Dividend Pattern and Policy of BSE Companies

Abstract

Dividend policy is very important in the mechanism that can be used to reduce agency costs as the dividend payment reduces arbitrary funds that are available with management of the organisation for prerogative consumption and opportunities of investment and thus requires financing in capital markets which compels the managers to be disciplined. Dividend policy of an organization has implications for managers, lenders, investors as well as other stakeholders. For the managers flexibility of investment in various projects depends on the amount of dividend which they can offer to their shareholders as increase in dividend means less funds available for investments. For the lenders its implication is on the redemption and servicing of their claims as lender’s are having interest in the dividend that a firm declares. For the investor’s dividend is the most important part of their income, whether dividends are declared today or provided later are not only the part of regular income but also an important part for firm’s valuation.