What factors affect dividend policy decisions?

What are the factors that affect the dividend decision?

The following are the some major factors which influence the dividend policy of the firm.

  • Legal requirements. There is no legal compulsion on the part of a company to distribute dividend. …
  • Firm’s liquidity position. …
  • Repayment need. …
  • Expected rate of return. …
  • Stability of earning.

What is dividend decision explain any 5 factors which affect dividend decision?

(i) Stability of dividend (ii) Shareholders’preference. (iii) Legal constraints (iv) Access to capital market. Explain the following as factors affecting dividend decision. (i) Stability of earnings (ii) Growth opportunities. (iii) Cash Flow position (iv) Taxation policy.

What are the factors affecting this decisions?

Factors Affecting Decision-Making

  • Programmed versus Non-programmed Decisions.
  • Information Inputs.
  • Prejudice.
  • Cognitive Constraints.
  • Attitudes About Risk and Uncertainty.
  • Personal Habits.
  • Social and Cultural Influences.

Which is one of the internal factor affecting dividend decision?

The expected dividend payout is influenced by many factors such as after tax earnings, availability of cash, shareholders expectation, expected future earnings, liquidity, leverage, return on investment, industry norms as well as future earnings.

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How does dividend decision make what are the aspects of dividend decisions?

Dividend decision determines the division of earnings between payments to shareholders and retained earnings. … The dividend decision, which consider the amount of funds retained by the company and the amounts to be distributed to the shareholders, is closely linked to both investment and financing decisions.

Which of the following external factors affect the dividend policy?

1) Dividend payout rate- defined as the ratio of dividends per share and earnings per share. 3) Unregulated firms in this result are compared with earlier studies. … 5) Amount of profit to be retained in the firm.

Which of the following affects the dividend decision policy of a company?

1. Amount of Earning :- A firm pays dividends out of its current and the past earnings. This implies that earnings play a key role in the dividend decision. A company having higher earnings will be in a position to pay a higher amount of dividend to its shareholders.

What are the five factors that affect decision making?

This study addresses the influencing factors that are related to decision making, and categorizes them under five captions: Personal factors, organizational factors, Social factors, Environmental factors and behavioural factors.