17.2 FACTORS INFLUENCING THE DIVIDEND POLICY
The framing of a dividend policy is primarily influenced by four factors, these are: the preference of the shareholders for getting dividend as well as for exercising control over the firm; financial requirements of the firm; legal and financial constraints; and the macroeconomic environment in the country. These factors need some explanation.
17.2.1 Expectations of the Shareholders
Normally shareholders prefer current dividend insofar as the future is uncertain and dividend payment generates confidence among them. This means that a firm should maintain a higher dividend pay-out. However, the preference for higher dividend is not equally applicable to different kinds of shareholders.
Shareholders belonging ...
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