Impact of Dividend Policy on Shareholders' Value: A Study on Apollo Hospitals Ltd.

Abstract

Dividend policy has been an issue of interest in financial literature since Joint Stock Companies came into existence. Dividends are commonly defined as the dis tribution of earnings (past or present) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy connotes to the payout policy, which managers pursue in deciding the size and pattern of cash distribution to shareholders over time. Managements' primary goal is shareholders' wealth maximization, which translates into maximizing the value of the company as measured by the price of the company's common stock. This goal can be achieved by giving the shareholders a ''fair' payment on their investments. Thus, dividend policy is one of the most complex aspects in finance. The present study attempts to analyze the impact of dividend policy on Shareholders' Value with a case study on Apollo Hospitals Ltd., which is purely of empirical nature. Apollo Hospitals is widely recognized as the pioneer of private healthcare in lndia, and was the country's first corporate hospital. Popular Statistical tools like Factor Analysis is used for the study.