Vol: 10, Issue: 4 2020

Page: 50-55

EMPIRICAL INVESTIGATION ON THEORIES OF DIVIDEND POLICES- RELATION BETWEEN PAY-OUT RATIO AND FINANCIAL PERFORMANCE

Dr. Arvind Rayalwar

The purpose of this study is to examine the application of dividend theory in various market contexts by analyzing existing theoretical literature and empirical evidence on dividend policy. Several theories have been proposed to explain the relationship between dividend policy and firm value. Prior to the seminal paper by Modigliani and Miller in 1961, it was widely assumed that dividend policy had a significant positive influence on company value and that managers could easily influence investor behavior by changing its dividend payment policy. The determination of the appropriate dividend and retained profits mix, as well as its impact on profitability, has been a source of contention in financial management literature. This research aims to contribute to the ongoing discussion by investigating the relationship between dividend pay-out ratio and financial success. It is recommended that corporations strive to implement a strong dividend payout strategy that encourages investment in initiatives with a positive Net Present Value.