Dividend Pay-Out Policy and Firm Performance

Teh Chew Yee

Faculty of Business, Raffles University Iskandar

Johor Bahru, Johor, Malaysia. Email: chewyeeteh@gmail.com

 

Abstract

Dividends are the key indicator of share price and share price the key indicator of firm value it should be that in order to maximize shareholders wealth, shareholders should be awarded the highest combination of dividend and increase in share price. When a company makes profits, it can either decide to retain the profits for expansion by investing in new projects or pays it out to shareholders in term of dividend. This paper aims at providing an understanding of dividend policy by reviewing the existing literatures on dividend policy and the relationship between dividend policy and firm performance.

 

Keywords: Financial performance, returns of equity, returns of assets, dividend policy, dividend payout earning per share.

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