Corporate Dividend Policy and Stakeholders: Evidence of Influence in the Presence of Symmetric and Asymmetric Information

Abstract

This article examines the effects of dividends on the welfare of firms and stakeholders beginning with the seminal work of Miller and Modigliani ( 1961) and key research since that time concerning taxation, information content, and agency costs. Through this research, it becomes evident that dividends have considerable impact on the parties involved, these parties are inclined to realize and capitalize on that influence, and this median of exchange may explain the persistence of dividends. One hundred fifty stocks are then randomly selected from the S&P500 and tested for existing relations between dividend payout ratios and financial indicators as they exist within the industries.