Dividend Policy in Corporate Sector of India

Abstract

Dividend policy is challenging for the directors and financial manager a company, because different investors have different views on present cash dividends and future capital gains. Another confusion that pops up is regarding the extent of effect of dividends on the share price. Due to this controversial nature of a dividend policy it is often called the dividend puzzle. Various models have been developed to help firms analyze and evaluate the perfect dividend policy. There is no agreement between these schools of thought over the relationship between dividends and the value of the share or the wealth of the shareholders in other words. One school consists of people like James E. Walter and Myron J. Gordon who believe that current cash dividends are less risky than future capital gains. Thus, they say that investors prefer those firms which pay regular dividends and such dividends affect the market price of the share. Another school linked to Modigliani and Miller holds that investors don't really choose between future gains and cash dividends. Dividend policy whether effect the value of firm or not this is a unsolved question there are lot of approach which say that dividend policy effect the value of firm and lot of approach which say that dividend is irrelevant for value of firm in this paper we took sample of top 6000 companies  of India who pays dividend more than 30%of profit  for the period 2010 to 2013 by using t-test to find whether dividend policy effect the value of firm or not