DIVIDEND POLICY

DIVIDEND POLICY

Subject : Economics

Context: To strengthen corporate governance practices and disclosure requirements, markets regulator SEBI on Thursday decided that the top 1,000 listed firms listed on the stock exchanges should formulate a dividend distribution policy.

Concept :

• Dividend policy is an important element in financial management. This policy is associated with financial policies about paying cash dividend in the present or paying an increased dividend at a later stage.
• The term dividend denotes to that portion of profit which is distributed among the proprietors/shareholders of the firm.
• Whether to issue dividends, and what amount, is determined primarily on the basis of the company’s unappropriated profit (excess cash) and influenced by the company’s long-term generating revenues.