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Examining Validity of Known Dividend Models in Indian Companies

Dr. Shaveta Gupta, Dr. Balram Dogra, Dr. AK Vashisht


Dividend declaration is considered as one of the key focus areas of the firm’s financial policy. The core of dividend policy includes the decision like whether to distribute profits to the shareholders in the form of dividend or to retain. The dividend decision, one of the widely researched topics, yet named as dividend puzzle, has been a center of attraction for the past number of decades. The outcome of the past researches has resulted in development of number of models trying to explain the dividend behavior of the companies. Some of the well-known dividend models are: Lintner’s model, Brittain’s model, Watt’s model and Aharony’s and Swary’s model. Considering the importance of the models, an attempt has been made to study their applicability in Indian conditions. This study investigates whether these models 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 in four industrial sectors: Engineering, FMCG, IT and Textiles. The study bring forth that out of all the models, Lintner’s model does have a good fit in the selected Indian companies.


Dividend; Lintner’s model; Brittain,s model; Watts model; Aharony and Swary’s model

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IJME introduces peer-review from its first Edition onwards. The researchers submitting their papers for publication should review atleast one technical paper from their domain. The manuscript also undergoes mandatory procedural review with IJMES review and scholar panel.