Introduction of dividend policy affect corporate earnings and profitability

        In recent years the competition in the market has increased up to lot of extent and organizations are looking for the ways to increase their profitability for sustaining in the long run. Corporations want to attract huge amount of investors so that they can finance their assets and their daily operations. For attracting investors corporations provide significant amount of dividend on the stocks so that investor’s aim of wealth maximization can be fulfilled. The dividend policy of any organization has huge significance for its management because the management of the corporation knows that if it dividend policy is not established by keeping the investors interests in mind then the company might unable to attract generate equity. On the other hand if the corporation will provide too much dividend than corporation might face profitability issues. The aim of this paper is to provide deep insights regarding whether the dividend policy of the organization has impact on its profitability or not. For this the relationship between the dividend policy and profitability of the corporation will be evaluated critically with the help of relevant literature and creation of empirical case study.

Discussing Dividend policies In the light of Academic Papers of dividend policy affect corporate earnings and profitability

        The dividend policy have become a matter of concern for many organizations because they know that it will have impact on their profitability or business valuation. Many researchers have conducted studies to evaluate the dividend policies of the organization.  The researchers HirinduKawshala & KushaniPanditharathna (2017) have conducted the study to investigate the dividend policy effect over the profitability of the corporation. In the study the researchers have taken the beverage & food industry. In the study the researchers have stated that the profit allocation policy decision is quite difficult for the organization and have significant impact on the profitability of the organization. In the study the relationship between dividend policy and profitability is analyzed critically. Regression is used for analyzing the relationship. The findings of the study indicates that there is positive relationship between Dividend policy & profitability of the organization (HirinduKawshala and KushaniPanditharathna 2017).

        The study conducted by Craig Doidge & Alexander Dyck (2015) have discuss the corporate policies and taxes on the organization. The study indicated that increase in taxes reduce the value of the corporation. Moreover the policies which the organization implement shape the activities of the corporation. Overall it can be said that the corporate policies have significant impact on the performance of the corporation. Through this study one can understand the importance of the corporate policies and their effect on performance & profitability (DOIDGE and DYCK 2015)

        The researchers H. Kent Baker& Rob Weigand (2015) have discussed the dividend policies of the corporations in the study. For conducting the study the researchers have performed extensive literature review to investigate the issue thoroughly. The findings of the study indicate that the dividend policy remains important for the corporation. Over the years the dividend policies have changed and the corporation wants to keep their dividend policy according to the preferences of the investors (Baker and Weigand 2015)

References of dividend policy affect corporate earnings and profitability

Baker, H. Kent, and Rob Weigand. 2015. "Corporate dividend policy revisited ." 41 (2): 126-144.

DOIDGE, CRAIG, and ALEXANDER DYCK. 2015. "Taxes and Corporate Policies: Evidence from a Quasi Natural Experiment." 70: 45-89.

HirinduKawshala, and KushaniPanditharathna. 2017. "The Effect of Dividend Policy on Corporate Profitability: An Empirical Study on Beverage, Food and Tobacco Industry in Sri Lanka ." 7 (8): 542-546.

Nissim, Doron, and Amir Ziv. 2001. "Dividend Changes and Future Profitability ." 56: 2111-2133.