Determinants of Dividends-A Study of Indian Companies Listed in BSE 100 Index

Abstract

 This paper investigates the determinants of dividend decisions of the firms listed 
in BSE100 index. The impact of fundamental variables like profitability, size, risk, 
growth and liquidity on dividend payout is examined. Statistical techniques of 
correlation and regression have been used to explore the relationship between the 
key variables. The findings provide a strong support to the argument that 
profitability and risk of a firm have a significant impact on the dividend policy 
decisions of firms. The risk of a firm is also observed to be an important 
contributor in the dividend decisions and has a significant negative correlation 
with the dividend payout.  It can also be concluded that other variables like 
liquidity, size and growth do not have a significant impact on the dividend 
decisions of BSE100 Index companies.