Dividend decision: a study of managers perceptions

Abstract

In finance literature several theoretical constructs have been proposed to explain the dividend policy of a company. Several empirical studies have been conducted to test these theories. Very few attempts have been made to understand the perceptions and attitudes of managers about the factors they think are important in determining dividend policy. It is with this objective that the present study purports to present the survey results. The study attempts to answer the following questions: 1. What factors do managers consider important in deciding their companiesz dividend policy? 2. Do managers perceive a relationship between their companiesz dividend policy and the value of the share? 3. Do managers consider last yearzs dividend policy relevant in deciding the current dividend policy? 4. Do managers think tax status of their shareholders as an important determinant of dividend policy? 5. Do managers use dividend policy as a signal for indicating the companyzs future prospects to shareholders? 6. Do managers consider dividend payment merely as a residue?