Dividend Policy and Taxation—A Review

Abstract

Indeed, corporate dividend policy and taxation is a subject of intense research. Mostly, statutory amendments in the dividend tax practice fabricate the dividend payout policy of corporate sector. At times, corporate composing substantial promoters’ securities are identified to keep a major objective to curtail their dividend payout. The study aims at analyzing the interaction between dividend policy and taxation. This paper provides a brief contribution of the diverse thoughts on the clientele effect for analyzing the impact of taxation on corporate dividend policy and finds that the temporal pattern of corporate dividend payout and dynamic dividend behavior have significant impact on taxation in variety of modalities. The findings have significant implication for companies, investors and the Government. Keywords: Dividend; taxation; clientele effect; Corporate dividend policy; shareholders.