International Journal of Financial Management

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A Study on Dividend Policy and its Impact on the Shareholders Wealth in Selected Banking Companies in India


Affiliations
1 Director, Charak Institute of Business Management, Lucknow, U.P., India
2 Director, United Institute of Business Studies, Dehradun, India
3 Independent Financial Consultant
     

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Survival of economy depends upon smooth supply of financial resources which is possible only if nation banking sector is effective, efficient and strong. Its goodwill, fund generation and its effective allocation, profitability, efficient management of dividend payout and profit retention play important role in its survival and growth. No company can ignore dividend but strategically invite careful analysis of it to develop everlasting solution to the problem of payout and retention ratio which impact share price and maximization of wealth. The present study attempts to analyze the impact of dividend on shareholders wealth of eleven selected Indian banks listed and actively traded in National Stock Exchange (NSE) during the period 2006 to 2010 using multiple regression technique, in addition t-values, the coefficient of determination (R2) has been calculated and its significance also been tested with the help of F-Value. The first part of paper gives an insight about the dividend and its legal implications. The second part consists of data and their analysis which revealed the fact that there is significant impact of dividend policy on the shareholder's wealth in Indian banking companies. At the end, concluding remarks and suggestions are given. Gilt schemes are seen to have been positive. However, the observed positive performances of the selected schemes are not statistically significant.

Keywords

Dividend Per Share (DPS), Market Price Per Share (MPS), SD, T-Values, Sig- Value, P/E Ratio, Retained Earnings (RE)
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  • A Study on Dividend Policy and its Impact on the Shareholders Wealth in Selected Banking Companies in India

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Authors

S.M. Tariq Zafar
Director, Charak Institute of Business Management, Lucknow, U.P., India
D.S. Chaubey
Director, United Institute of Business Studies, Dehradun, India
S.M. Khalid
Independent Financial Consultant

Abstract


Survival of economy depends upon smooth supply of financial resources which is possible only if nation banking sector is effective, efficient and strong. Its goodwill, fund generation and its effective allocation, profitability, efficient management of dividend payout and profit retention play important role in its survival and growth. No company can ignore dividend but strategically invite careful analysis of it to develop everlasting solution to the problem of payout and retention ratio which impact share price and maximization of wealth. The present study attempts to analyze the impact of dividend on shareholders wealth of eleven selected Indian banks listed and actively traded in National Stock Exchange (NSE) during the period 2006 to 2010 using multiple regression technique, in addition t-values, the coefficient of determination (R2) has been calculated and its significance also been tested with the help of F-Value. The first part of paper gives an insight about the dividend and its legal implications. The second part consists of data and their analysis which revealed the fact that there is significant impact of dividend policy on the shareholder's wealth in Indian banking companies. At the end, concluding remarks and suggestions are given. Gilt schemes are seen to have been positive. However, the observed positive performances of the selected schemes are not statistically significant.

Keywords


Dividend Per Share (DPS), Market Price Per Share (MPS), SD, T-Values, Sig- Value, P/E Ratio, Retained Earnings (RE)

References