Determinants of Dividend Policy in the Select Indian Manufacturing Industries – An Empirical Investigatio

Abstract

Manufacturing sector has been recognized as the main engine for economic growth and creation of wealth in India. Accordingly, emphasis was placed on growth of industry in most of the five year plans formulated by planning commission of India. In the present complex corporate environment, the finance managers need to revise their strategies to manage the challenges posing them. Dividend declaration is considered to be one of the most important criteria for the distribution of value to the shareholders. Dividend policy adopted by a firm has an inference in the practical life for both the managers and the organization’s stakeholders. The present study aims to identify the factors determining the dividend policy of select Indian manufacturing companies for a period of 10 financial years from 2005-2006 to 2014-2015. The factors affecting dividend policy of select manufacturing industries in India are identified by using Lintner’s Model, Brittain’s Cash Flow Model and Brittain’s Explicit Depreciation Model. The factors identified with the models and other factors are grouped to extract the major determinants of dividend policy.