17
Dividend Theories and Policy
OBJECTIVES
To make an appraisal of various theories of dividend
To explain the factors influencing the dividend policy of a firm
To focus on the stability of dividend payment
To explain bonus shares and the relevant statutory provisions in India
To describe share split, reverse split, and repurchase of shares
It is a common practice among the firms to allocate a part of their net profits for dividend payments and to retain the other part within the firm with a view to making investments. The retained profit is thus a source of financing. Since such funds are generated out of the firm’s operations, they are known as an internal source of financing quite at par with some non-cash charges, such as, depreciation ...
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