Dividend Determinant in Emerging Economy: An Empirical Evidence of Selected Manufacturing Firms of India

Abstract

The current research work is an attempt to explore and identify the determinant of dividend policy with special reference to manufacturing industry of India. For this purpose, five key determinants have been identified based on the review of literature and study have been conducted on eight selected firms of Indian Manufacturing Industry listed in Bombay Stock Exchange. The study was conducted during the period of 2013 to 2015 and multiple regression analysis has been used for identifying and establishing the relationship between key determinant and its effect on dividend policy. The research revealed the significant and positive impact of free cash flow on dividend policy whereas managerial ownership has a significant but negative impact. All other independent variables such as debt policy, firm size and profitability do not have a significant effect on the dividend policy of the firm. Keeping in view the industry specific characteristic the present study is an attempt to fill the dearth of empirical evidences in field of corporate finance with special reference to emerging economies like India.