1. BHAGYALAKSHMI Kâ€‹ - Assistant Professor, Department of Management Studies, Visvesvarya Technological University,
Centre for Post-Graduation Studies, Mysuru.
Dividend Policy is used to decide the portion of earnings distributed by company to its shareholders. In ever increasing Indian economy with the effect of LPG rapid development has been done in Indian Manufacturing and Service sector. Hence, Indian companies are facing great competition in every field of activity. So, at present companies are confused and apprehensive. To maintain the competitiveness and add value to the company the apex body have to make proper financial and dividend decisions which leads to long run perspective. Hence, the present study is intended to study how far the dividend payout has impact on shareholders' wealth in general; and in particular to study the relationship between the shareholders' wealth and the dividend payout and to analyze whether the level of dividend payout affects the wealth of the shareholders. The study is an attempt to give a focus on dividend policy and its impact on shareholders wealth. BSE 500 index companies were chosen. Companies were divided into two segments a) Manufacturing sector and b) Service sector. Manufacturing sector comprises of 296 companies and Services companies comprises of 204 companies. The study is carried out by using regression analysis, which is used to find out a mathematical relation between the dependent and the independent variables to see the effectiveness of both. From the study The Hausman test results revealed that the Random Effect Model was found to be appropriate model to predict the shareholders wealth of 224 manufacturing companies from BSE500 index using dividend payout ratio as independent variable. The Hausman test results revealed that the Random Effect Model was found to be appropriate model to predict the shareholders wealth of 95 service companies from BSE500 index using dividend payout ratio as independent variable.
dividend policy, retained earnings, shareholders wealth.