Analyzing the Impact of Dividend Policy on the Value of Listed Companies- Insights from India

Abstract

The objective of this study is to enrich the literature by investigating the effects of dividend policies on the value of listed companies in India. The data used in this study consists of 596 listed companies on the NSE Stock Exchange for the period 2021 to 2024. Using the Fixed Effects Model (FEM), the empirical findings confirm that the dividend payout ratio has a positive relationship with the value of the listed company. This finding supports the bird-in-hand theory, suggesting that investors prefer to receive dividends in cash rather than capital gains in the future. Additionally, this study finds that dividend payment methods significantly affect the value of listed companies. In fact, cash dividends positively affect the value of the listed company. The evidence is consistent with the signalling theory, indicating that payment for dividends in cash is a good signal from the company.