Dividend Policy Behaviour in the Indian Capital Market: A Study of BSE-30 Companies

Abstract

The numerous published theoretical and empericial papers and kept dividend policy in its prominent status in the corporate
finance literature. Much o f the empirical research has been
applied on com panies listed on advanced stock markets.
Employing the multivariate regression analysis, this paper
examines the dividend policy behaviour o f companies listed on
the Bombay Stock Exchange (BSE - 30) with Linter's m odel o f
dividend. Based on the time period 1996-97 to 2004-05, it is
concluded, that BSE - 30 Indian companies follow stable cash
dividend policies. Moreover, the results indicate that the earning
capacity o f the com panies is most influencing factor in
determin ing dividend policies o f the sam ple firms. The result o f
, study clearly indicate that current year's dividend rate is positively correlated to dividend payout ratio , earning per share and years profit and previous years dividend rate.