Abstract

The article presents information on corporate dividend policy. Corporate dividend policy has been examined normatively and empirically in studies of investment behavior and as part of larger works on corporate finance. Dividend decisions are of particular interest because they can be traced to a specific group of individuals within the organizational hierarchy. Decisions on major capital expenditures typically are made at varying levels within the organization depending upon the relative size and importance of each investment project. The responsibility for operating decisions and other policy measures may also be difficult to pinpoint within the complexity of large business organizations. But corporate dividend decisions are made expressly by the board of directors of the business firm. Another characteristic of corporate dividend policy is that a gap exists between the prescriptions of economic and financial theory and the real-world practices of corporate directors. This paper will not attempt to bridge that gap, but will attempt to clarify the empirical side by postulating and testing an alternative hypothesis of corporate dividend policy.