Journal Press India^®

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Purpose: The present article tends to study the dividend behavior of NSE and BSE firms over the last five years. Design/Methodology/Approach: The article studies the dividend trend of the selected firms for the period 2001-2005 and divides them into payer and non-payer groups. Further, the study uses regression analysis to establish the relationship between dividend paid and Investment Opportunities, Growth, Cost of Equity and Ownership Structure. Findings: The study depicts payer firms to have large size, less investment opportunities and high cost of retained earnings and the opposite in case of non-payers. Both of these however show an increase in dividend paid with increase in equity ownership by promoters as this helps in reducing agency costs. Research Limitations: A wider time frame could have been taken to enable researchers to replicate and generalize the results. Managerial Implications: The success of financial managers is tied to the maximization of shareholders' wealth (and firm value), so they must understand the dynamics of dividend policy. Originality/Values: The paper uses several financial variables to explain the possible differences in the dividend policy of both payer and non payer firms and the reasons for nonpayment.

Keywords

Dividend Payout Policy, Payer Firm Non-payer, Investment Opportunities.

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