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Theoretical Models of Dividend Policy

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  • Christian Tanushev

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

Why do modern corporations pay dividends and how does dividend policy affect company’s performance remain controversial theoretical questions in both developed and emerging markets. This paper aims to describe concepts and empirical evidence about three of the most widely discussed theories: namely the theory of the dividend payment preference, the theory of irrelevance, and the theory of tax benefits from profit reinvestment. This is a preliminary stage of a study of the dividend policy of publicly traded companies in Bulgaria. By using these theories the future research of data will be based on the achievements of world science and the applied models will be comparable with the results obtained in other countries.

Suggested Citation

  • Christian Tanushev, 2016. "Theoretical Models of Dividend Policy," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 299-316, September.
    • Handle: RePEc:nwe:eajour:y:2016:i:3:p:299-316
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    References listed on IDEAS

    as
    1. Peterson, Pamela P. & Peterson, David R. & Ang, James S., 1985. "Direct evidence on the marginal rate of taxation on dividend income," Journal of Financial Economics, Elsevier, vol. 14(2), pages 267-282, June.
    2. Kenneth J. McKenzie & Aileen J. Thompson, 1995. "Dividend Taxation and Equity Value: The Canadian Tax Changes of 1986," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 463-472, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    dividends; dividend policy; public companies; personal wealth;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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