The Importance Of Dividend Policy

Dividends - Dividend Policy

Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders.

Three important theories on dividends can help us understand why different companies’ shareholders have varying interests in dividends:

1. Dividend irrelevance

2. Tax aversion (tax preference theory)

3. Bird-in-hand

Dividend irrelevance

The dividend irrelevance hypothesis is built to a great extent in light of the imperative examination done by Miller and Modigliani who came to the decision that in a universe of no duties, no speculation costs, discerning financial specialist conduct, and unendingly distinguishable shares that profits ought to be insignificant to shareholders.

In the event

Naturally, then, the tax aversion theory states that investors with higher tax rates should prefer to own shares that pay lower dividends or none at all.This can be particularly true in countries where the capital gains rate is well below the dividend tax rate. In such a circumstance, it stands to reason that compan Like exchaning expenses, assessments decrease acknowledged returns. Characteristically, then, the assessment repugnance hypothesis expresses that financial specialists with higher duty rates ought to like to possess offers that pay lower profits or none by any

Then again, these hypotheses have been produced in distinctive fields, and as per some proof this approach remains a sort of problem in the monetary cycles of companies. Hence we manage them as one of the ten most pivotal issues of organizations. The point of this study is to expound a model which would empower us to analyze the impacts of profits in connection to benefit, size, beta rate, the rate of held gaining, P/E, and obligation proportion. As such, our point is to discover a response to this inquiry: Do these aforementioned elements influence the profit arrangement in Iran or not? This exploration covers all recorded organizations in the Tehran Stock Exchange somewhere around 2000 and 2008. As per the consequences of the study there is a direct relationship in the middle of profit and productivity. On the other hand, the outcomes additionally uncover that there is a converse relationship of these variables with P/E, beta rate and obligation degree. Besides, the aftereffects of the study demonstrate that there is no important relationship between the profit strategy and an organization's size and rate of held