Review of Corporate Dividend Policy Models - a Prolosue

Abstract

Dividend policy is one of the vital decision areas of corporate finance. At the time of formulation of dividend policy different economic factors, monetary factors, legal factors and other factors considered relevant by the financial experts are to be considered. Many attempts have been made by researchers to explain the dividend behavior of the companies in different countries over a long period of time. But the "dividend puzzle" (F. Black, 1976) remains. In the present study, we have put forward a sincere effort to review the well-known models as proposed by famous scholars in the field of finance as well as other few prominent studies relating to applicability of different dividend policy models in both the western developed countries and India. From the survey of the existing studies on the applicability of different models on dividend policy, it is evident that the Lintner's model and Britain's model are mostly applied by the researchers. However, the other models are also important to explain the dividend behavior of different firms.