International Journal of Financial Management

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A Study on Validity of Lintner's Model of Dividend in Indian Companies


Affiliations
1 Assistant Prof. at Apeejay Institute of Management, Jalandhar
2 Professor and Vice Chancellor, Sri sai group of Institutes, Palampur
3 Professor, University Business School, Punjab University, Chansigarh
     

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Dividend declaration is considered as one of the key focus areas of the firm's financial policy. It is generally accepted that the payment of dividends is the most widely used instrument for the distribution of value to shareholders. Shareholders also prefer to receive regular dividends. A well-known model that attempts to explain dividend policy is that of Lintner (1956). This study investigates whether Lintner's model can be used to explain Indian companies' dividend payments or not. 172 companies listed with BSE with continuous dividend payments from 2004-08 have been selected from four industrial sectors: Engineering, FMCG, IT and Textiles. The study brings forth that Lintner's model does have a good fit in the selected Indian companies.

Keywords

Dividend, Lintner’s Model and Multiple Regression Analysis
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  • A Study on Validity of Lintner's Model of Dividend in Indian Companies

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Authors

Shaveta Gupta
Assistant Prof. at Apeejay Institute of Management, Jalandhar
Balram Dogra
Professor and Vice Chancellor, Sri sai group of Institutes, Palampur
A. K. Vashisht
Professor, University Business School, Punjab University, Chansigarh

Abstract


Dividend declaration is considered as one of the key focus areas of the firm's financial policy. It is generally accepted that the payment of dividends is the most widely used instrument for the distribution of value to shareholders. Shareholders also prefer to receive regular dividends. A well-known model that attempts to explain dividend policy is that of Lintner (1956). This study investigates whether Lintner's model can be used to explain Indian companies' dividend payments or not. 172 companies listed with BSE with continuous dividend payments from 2004-08 have been selected from four industrial sectors: Engineering, FMCG, IT and Textiles. The study brings forth that Lintner's model does have a good fit in the selected Indian companies.

Keywords


Dividend, Lintner’s Model and Multiple Regression Analysis

References