Factors Affecting Dividend Decisions in Indian Commercial Banks

Abstract

Dividend decisions are considered to be one of the most complex decisions in the area of corporate finance. The area of corporate dividend policy has attracted attention of management scholars and economists culminating into theoretical modeling and empirical examination. Shareholders wealth is represented in the market price of the company's common stock, which, in turn, is the function of the company's investment, financing and dividend decisions. Among the most crucial decisions to be taken for efficient performance and attainment of objectives in any organization are the decisions relating to dividend. Dividend decisions are recognized as centrally important because of increasingly significant role of the finances in the firm's overall growth strategy. It also affects the decision of potential investors regarding investment in company's equity and overall market value of the company's share. In this paper, an attempt has been made to ascertain influence of the factors i.e. Size of the Firm, Debt Equity Ratio, Net Cash Flows, EBIT, Dividend Yield, EPS, Price to Book Value on the dividend payout of Indian Commercial Banks for a period of 2008 - 2014.