Abstract
Development of financial markets and investment sector have ensured mutual reinforcement which was started in 1995 and deepened until the collapse of the bubble in 2000, which refined the characteristics of the web. This study thoroughly investigates speculative dot com bubble in research related to corporate finance by exploring the issues of dividend policy. In addition, we examined the dividend policy and speculative bubbles on the dataset and S&P 500. This study designs the contours of this capacity with emphasis on the generation of demand. Considering the “dividend smoothing” phenomenon, this article raises question on the efficiency of dividends observed as an important factor that affects investment bubbles. This study builds hypothetical payouts of dividends as per the corporate earnings reported. It is inferred that firms’ dividend policy affects speculative bubbles. The “dotcom bubble” is widely known as a common example for a “stock price bubble” in various equity indices like NASDAQ. It is observed with the dividend series observed as a common factor. It is not basically the case with the adjusted time series of dividends.
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