al 2003 131-40) Although the jury is still out on dividend policy, and there is no general consensus on the relationship between dividend policy and share value, the empirical evidence available would seem to suggest that, at least in practical terms, dividend policy is highly relevant to corporate managers, shareholders and investors, particularly the large institutional investors. (Farrelly 2003 62-74)It would only seem logical therefore that this behavioural aspect of dividend policy is recognised by a firm's managers in the formulation of its own dividend policy. It is intriguing that, over twenty years later, and despite voluminous academic research, the two basic questions posed by Fisher Black, in his famous article 'The Dividend Puzzle' in 1976: (1) Why do corporations pay dividends? And (2) why do investors pay attention to dividends? Still remain without definitive answers.
References1.Ang, J.S., Do Dividends Matter? A Review of Corporate Dividend Theories and Evidence, (New York: Salomon Brothers Center for the Study of Financial Institutions, New York University, 2003).
2.Asquith, P., and D.W. Mullins, \Impact of Initiating Dividend Payments on Shareholder Wealth,\3.Bajaj, M., and A. Vijh, \Clienteles and the Information Content of Dividend Changes,\Journal of Financial Economics, 26, no. 2 (August 2004), pp. 193-219.
4.Baker, H.K., \Relationship Between Industry Classification and Dividend Policy,\
5.Baker, H.K., G.E. Farrelly, and R.B. Edelman, \Dividend Policy,\6.Barclay, M.J., C.W. Smith, and R.L. Watts, \Determinants of Corporate Leverage and Dividend Policy,\Journal of Applied Corporate Finance, 7, no. 4 (Winter 2005), pp. 4-19.
7.Benesh, G.A., A.J. Keown, and J.M. Pinkerton, \Examination of Market Reaction