Abstract
The relationship or the relevance between the relevance dividend policy and irrelevance dividend policy have been a theoretical and empirical debate since ages due to the financial decision of paying dividend to equity holders of retain dividend later to be re-invested to the firm to improve the overall net worth of the business. The study employed the ex-post facto research design which the researcher has no control over. The secondary panel data was sourced from the financial statement of the manufacturing and financial firm within 2017-2023. The data was subjected to panel regression technique. The findings revealed that earning yield has negative significant effect on retained earnings for dividend irrelevance model while market price of share and price-earnings ratio has negative and positive significant effect on dividend payout ratio for the dividend relevance model. Based on the findings of the both theory and postulation they equally have the tendency to determine firm valuation. The result for the dividend irrelevance model illustrated that retained earnings could be essential to stimulate how much percentage a company could earn in terms of earning per share while the dividend relevance model showed that sharing dividend at the end of any calendar year have the capacity to determine period valuation of shares on the stock market and dollar investment of a particular share. Based on the different school of thought of the dividend irrelevance theory group (Modigliani and Miller, 1961) and the dividend relevance theory group (Gordon, 1962) this study intends to develop a model for each theory to examine through the findings of the study which theoretical postulation in really is relevant in terms of firm valuation.
Published Version
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