Analysis of Dividend Payout by Indian BSE Listed Indexed Companies

Abstract

Dividend policy is one of the main financial decision taken by the company and it is one of the most widely researched topic in the field of finance. It refers to the distribution of the company’s earnings to the shareholders and retained the sufficient earning in the company to meet the requirements for further growth and expansion. Different investors have different expectations on dividend payment term. Some of the investors prefer higher payout ratio and some of them prefer low payout ratio. So determining the optimum payout ratio is a difficult task for the company. This paper studies to investigate the Dividend Payout Ratio key determinants that influence the dividend decision. The study is based on the BSE listed indexed companies and five year data from financial year 2014-15 to 2018-19. The study examined the influence of explanatory variables such as Earning per Share, Book Value per Share, Market Price per Share and Promoter’s Ownership by using Linear Regression Analysis. The analysis provide evidence that the factors Earning per Share and Promoter’s Ownership has positive effect on payout ratio while the factors Book Value per Share and Market Price per Share has negatively affected the Payout Ratio. The study also suggest that all the four factors Earning per Share, Book Value per Share, Market Price per Share and Promoter’s Ownership do not have significantly affect the Dividend Payout Ratio of BSE listed indexed companies.