Dividend Policy and Its Impact on Performance of Indian Information Technology Companies

Abstract

This study is an attempt to evaluate the impact of dividend policy on profitability of Indian Information Technology (IT) companies listed on Bombay Stock Exchange. Companies were selected for the study based on market capitalization. Correlation matrix and panel regression model were used for testing of hypotheses. The major findings of the study reveal that the selected companies do not follow consistent pattern of dividend payments and the association between Price Earning Ratio (PER) and Dividend Payout Ratio (DPR) is low positive. However, there is a strong relation between ROE-ROA. Hausman Test reveals that random affect model is appropriate thereby indicating that performance of selected companies have significant impact on dividend policy of selected companies. Divided policy still regarded as one of the complicated area in corporate finance. Thus, the study will help all the stakeholders to develop further understanding on dividend policy.

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