Dividend

TABLE OF CONTENTS
List of Tables

i

List of Figures

iv

Abstract

v

Key Terms

ix
CHAPTER-1
Introduction

1.1 Introduction to Dividends

1

1.2 A Short History of Dividend Policy

6

1.3 Dividend Policy

9

1.4 Economic Rationale to Dividends

12

1.5 Dividend Policy and its Linkages with other Financial Policies

15

1.6 Pure Vs Smoothed Residual Dividend Policy

16

1.7 Dividend Declaration Process

17

1.8 Alternative Forms of Dividends

18

1.8.1 Stock Repurchases or Share buy Backs

19

1.8.2 Bonus Shares

19

1.8.3 Stock Splits

20

1.9 Declarations and Distribution of Dividends by a Company under Indian Law 20
1.9.1 Legal Regime

21

1.9.2 Mode of Declaration

21

1.9.3 Prohibition

22

1.9.4 Steps Involved in the Process of Declaration and
Distribution of Dividend

22

1.10 Dividend Payment Patterns across the Life Cycle of a Firm.

24

1.11 Dividend Distribution and its Impact on Shareholders Value

26

1.12 Dividend Payments: An Indian Scenario

29

1.13 Dividend Policy: The Global Perspective

36

1.13.1 Dividend Size and Frequency across the World

36

1.13.2 Institutional Features

37

1.13.3 Tax Differences

37

1.13.4 Dividend Payout Patterns around the World

39

1.14 Relevance and Scope of the Study

40

1.15 Chapter Plan

41

1.16 Conclusions

42

CHAPTER 2
Literature Review
2.1 Modigliani &Miller Approach (Dividend Irrelevance Proposition) (1961)
2.1.1. Conclusion
2.2 Dividend Policy and Agency Problems

44
46
47

2.2.1. Overview

47

2.2.2 Shareholders versus Debt Holders

47

2.2.3 The Differtial Impact of Dividends on Various Claimholders

49

2.2.4. Similar Conflicts

50

2.2.4.1 Shareholders versus Managers

51

2.2.4.2 Ownership versus Control

51

2.2.5 The Easterbrook Analysis (1984)

51

2.2.6 The Jensen Analysis (1986)

53

2.2.7 Other Empirical Studies on Agency

References: 279 11. Publications 304 12. Appendix 305