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How accurate is the statement that “The dividend policy of a firm is irrelevant”.
Social Sciences Research Network (2010)
  • George E Ekeha

Various studies suggest that the question of whether dividend policy affects the value of the firm has puzzled researchers and corporate managers for many years. It is evidence that dividend policy is one of the most widely researched topics in finance. Yet, researchers have different views about whether the percentage of earnings that a firm pays out in dividends materially affects its long-term share price, Dempsey et al, (1993). This essay tried to identify the various studies on the dividend puzzle. It is outlined in this essay that dividend payment by corporate organisations is influenced by various factors. Some of the factors discussed here include legal restrains, shareholders’ expectations, taxation and the cash-flow uncertainty effect. This essay established the fact that these factors play a very vital role in corporate managers’ decision to pay dividend.

  • Dividend Policy,
  • Shareholders Fund,
  • Dicvidend Relevance
Publication Date
Spring December 15, 2010
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Citation Information
George E Ekeha. "How accurate is the statement that “The dividend policy of a firm is irrelevant”." Social Sciences Research Network (2010)
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