Abstract
Dividend policy has been one of the most important research topics in modern corporate finance. From the practitioners’ viewpoint, dividend policy of a firm has implications for investors, managers, lenders and other stakeholders. The current study aims to examine critically the managers’ perception towards dividends and Dividend Policy of companies listed on Dhaka Stock Exchange (DSE) of Bangladesh. The study employed a practical survey on the perception of managers’ of twenty four companies to test the behavior of Bangladeshi listed firms towards dividend payout policy. Investigation of different dividend theories reveals that the bird-in-hand theory and the relevant value theory receive the highest support among the surveyed managers. It is also evident from the analysis that external factors related to the current financial market crises together with the state of the capital market and restrictions imposed by debt providers are all important factors in formulating dividend policy. The current study extends limited previous research based on questionnaire and survey related dividend policy. It thus provides new evidence from an emerging and fast growing economy like Bangladesh.
Highlights
Dividend is commonly defined as the distribution of earnings in real assets among the shareholders of the firm in proportion to their ownership (Baker et al, 2007)
The survey result indicates that the firms give importance to the dividend as it was in past and the growth is considered at time of declaration of dividend; the dividend decision is influenced by the competitor policy and the fear of signaling of shortage of profitable investment; and the results demonstrate that foreign listed companies are more concerned with dividend policy
The survey reveals, among others, that external factors related to the economic conditions together with the state of the capital market and lending conditions are all important factors in formulating dividend policy, and restrictions imposed on them by debt providers together with current financial market crises are the most important factors that affect their dividend policy
Summary
Dividend is commonly defined as the distribution of earnings (past or present) in real assets among the shareholders of the firm in proportion to their ownership (Baker et al, 2007). Perception is the initial step to know about motivation in terms of the meaning of dividends for financial decision makers, and to the shareholders In his classic work, Black (1976) could found no convincing explanation of why companies pay cash dividends to their shareholders and referred it as “dividend puzzle”. This study tries to explore the views of corporate managers’ of the companies listed on Dhaka Stock Exchange (DSE) of Bangladesh towards dividends and dividend policy with the help of a questionnaire survey. Literature in this area is scanty in numbers and partial in content. It is necessary to conduct a study to examine the managements’ perception towards dividends and dividends policy in Bangladesh
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