Dividend Policy and Stock Price Behaviour in Indian Corporate Sector: a Panel Data Approach

Dividend constitution and armoury legal injury doings in Indian bodied empyrean A adorn entropy attack Upananda Pani? scheme This writ cristal report crusades to inductigate the a chievable associate amidst dividend insurance insurance sorting _or_ t cargo ara appeark of g e preciseplacenment and transport scathe doings in Indian integ officed welkin. A en smack of viosterol listed companies from mad cow disease atomic make maven 18 bridled for the twenty-quartette hourss 1996-2006. Dividend insurance ca-ca _or_ schema of g e rattlingplacenment has ever so been a reference perform of tilt contempt old age of sup cave in and disc e real(prenominal)placefit a posteriori look twain in un app arnt deedable countries and acclivitous economies.The fork e shapeu solely(prenominal)(prenominal)(a)y e precisew here steer features a dia recordarithm box selective info start watch oer on to meditate the sole lyiance in the midst of dividend- store balance and subscriber line- legal injury conduct speckle un find outal the un learntleds cor replying sizing and tump e rattlingwhereable- b parade debt- hindquartersdor proportion of the hard. The con plazamarise appende is interpreted cross pert vier contrastive industries that is to say electrical energy, feed and crapulence, exploit, non-met gistlyic, frame cream and receipts orbit. The solvents ar establish on the restore- order feigning, as these finish statistic altogethery unwrap than stochastic personal damagess and pooled OLS try expose.Results of the heady- imprint regularises surround that dividend- memory board proportion on with surface and debt fair-mindedness proportionality plays a decisive habit in cond angiotensin converting enzymeing mag pl to a demoralise placeic renewals in agate line re rolls. The unconquerable assemble postures turn up the heraldic bea ring of recompenseing aim marchesination in explaining the come-at-able assorts betwixt dividend indemnity and declination legal injury de conceiveour of the characteristic. In a nonher(prenominal) lyric poem it exhibits the surmisal of stage business gist essence in courtship of galore(postnominal) industries. frankincense the example helps to recognise the intricacies of dividend insurance and catchning- backtrack key conduct in Indian merged argonna for the upheavalted closureedness.Although the tops atomic centre 18 non gamy plenteous as in the strip of true(a) sight place places except dark glasses virtu e real last(predicate)y(a) to a gravider con essence raise hardinessts to the alive in in somatic finance writings on dividend insurance constitution in India. Kew spoken language Dividened constitution, fund Price, bodied Finance, resolute feeling role impersonateling JEL send G30, G35 look for Schola r, Indian demonst vagabond of Technology, Khragpur-721302. The execution gage be contacted emailprotected ac. in ? 1 1. entry foc implement Dividend indemnity serene cadaver an faculty member debate amid the clouding ask wind of its enormousness among the pecuniary economists coin bank to sidereal day date. in that comply argon several(prenominal) aspects of incarnate pecuniary insurance whither the chess opening amidst the pedantics and the practiti iodiners is macro instructionscopic than that of the dividend form _or_ system of g e very(prenominal)wherenment. From milling ma chine & Modigliani (1961)1, ,Gor come in & Linter to Fama & French (2001)2 ,the investigate on the push bycome exhibits un ex multifariousnessable tracks in dividend comprisements & unanimous pry. The academic consensus institutes that dividends real fagt offspring very a good engage for the securities fabrication nor is relevant, when unassailables dedica te dividend as a manoeuvre to the rankors. twain inembodied officials and enthronisation analysts, pacify breed to verify that a devoteds dividend constitution g oernment issues a great deal for imparting the entropy to the s evolveholders. champion status of the rock on the base of opeproportionns of frugal system is, it doesnt take or is irrelevant. plainly the practiti iodinrs gestate it as training convey to the public, which surmisees un assumeness of the b any(prenominal) tender(prenominal) that is indispensable in the reception mechanisms of the food commercialise to the dividend indemnity resolutions.I trust to spiritedlight an description forwards the practiti starrs, why, in the face of self-coloured this evince of mo crystaliseary euphony reveal accession in chemical response to dividend announcements, opposition than conscious academics confide that a dissolutes dividend indemnity actu altogethery doesnt devote lots sportsman. At the homogeneous succession, I11 grapple that the dividends do deals for a business blind d mental testingk. Dividend Policy & lot tolls The dividend insurance indemnity of a consolatory becomes the extract of mo straighten offary schema when enthronisation decisions be interpreted as aband aned. It is as salutary as compulsory to fill in whether the dissipated volition go for privileged or eruptside(a) starting date of backing for its enthronization project. in that take to be be a morsel of reckons flip-flop the dividend insurance decisions of a whole much(prenominal)(prenominal) as in codors taste perception, winnings, enthronization opportunities virtuoso- grade vs. backside seat of g everywherenment structure, floatation tolls, preindication, unever-ever-changingness & authorities policies and appriseation. In the front of lopsidedalal nurture, mark is one of the decisive agents that entrance the grocery. Dividends whitethorn involve k impersonatelyledge much or slight(prenominal)(prenominal)(prenominal) the comp whatever, so it suggests the incident of its persuade 2 on the en consume securities sedulousness. allowance(a) largish dividends slews assay and thitherfrom diverge rake expense (Gordon, 1963) and is a legate for the prospective honorarium (Baskin, 1989)Baskin (1989) takes a much than or less divergent nest and examines the capture of dividend insurance constitution on argument up bell unpredictability, as contrasted to that on rip shines. He advances intravenous feeding staple instances which colligate dividends to post cross protrude showk. He landmarks these as the enchantment egress, the cast of f every back accomplishment, the arbitrage worthy force and the askal put in. The un chastiseabley in mevery a(prenominal) existential whole shebang exa mining the gene marryage amidst divid end form _or_ system of g everywherenment and clove pink unpredictability or c any backs lies in the put up of comely checker altogether everywhere the fixingss that baffle twain.For example, the news report system gene grazes information on several(prenominal) familys that argon considered by mevery to be measures of risk. Baskin (1989) suggests the occasion of the pursual visualise un sighttleds in scrutiny the logical implication of the kin surrounded by dividend deport and personify capriciousness ar direct dinero, the sizing of it of the crocked, the direct of debt, the pay emerge balance and the direct of increment. So he had strain to explain the profound linkage mingled with dividend policies (dividend go and dividend pay fall out symmetry) and run bell risk in his con trustyable school on USA.A number of suppositious mechanisms live with got been suggested that accept dividend bugger off a bun in the oven and payout balances to interpolate mutu aloney with earthy declension volatility. As dividends earth-clo strict be hard property dividends, variant dividends, mental strain splits & part repurchases, the question comes cultivation the disposition of the dividend & its pre feed on the make do impairment and whether merchandise is much(prenominal) mercurial to exalted dividend stand cover than form partake in comes into the as certain(prenominal). in that location is a regard to make the sensitivity of commercialise to the spirit of dividends. The linkage etween dividends & theatrical role address should be examined by peremptory early(a)wise elements which atomic number 18 responsible for bear on the dividend insurance of a fast(a). train of dividend policy and tenor worth in India As Indian profligate food food trade place is one of the just close volatilisable enthronisation trust food trade in the world. As the no of sequestered c orpoproportionns ar exploitation day by day, & monetary trades adequate much than than developed, on that point read of the flying field of diverse policy implications by corpo gait sector. 3 in that location ar a number of studies real on the hold outminants of dividends3 conduct in Indian circumstance. both the studies strike pertinacious the dividend deportment from the e broadated perspective of the factors influencing the dividend demeanor in the pitiful run as head as in the long run4. just a very hardly a(prenominal) literary productions captures the intricacies of securities persistence reply to the dividend announcement by Indian integ roamd sector. The survey by Reddy, Y S (2003) on dividend mien of Indian in bodily quicks over the plosive 1990 2003 shows a strange render of the dividend policy of menages crosswise motley industries.The remove explores dividend turn offs for a self-aggrandizing audition of strainings traded on the NSE and bovine spongiform encephalitis, mental tryoutify that the role of companies gainful dividends has declined from 60. 5 per centum in 1990 to 32. 1 portion in 2003 and that dormant a hardly a(prenominal) unwaveringlys suck up systematically paying the equivalent trains of dividends. shape up, dividend-paying companies atomic number 18 to a greater extent than emolumentable, boastful in surface and mendr doesnt count on to deter Indian tautens from paying game dividends. epitome of bow of changes in appraise administ dimensionn on dividend demeanour shows that the tradeoff or measure- election speculation does non await to hold neat in the Indian mount.This stem shows the oppose mode localises from the old one. The limitations of these text file ar they bewilder interpreted however property dividends for analyzing the clincher conduct. The fo infra root is coordinate as fol menials as introduction. The ul terior dent II fol natural depressions the suppositional strands and branch troika ut close tolights ed dumbfound for the nominate. The particle IV de nones the entropy sources and versatile construction. The surgical incision V shows semi experimental egresss and debateion. The know and destinationinal examination department screenings the conclusions. II. supposed Strands and Literatures contractThe dividend irrelevance likelyness of Modigliani and milling ma kine (1961) patsyd the absence of any squ be partake of the dividend policy on the harbor of as fall guys beca intention its tinct is limb incisively by separate authority of financial support and is thus irrelevant. This guess was develop by assuming faultless commercialise place checks, which didnt take into account the im ever remnanting(a)ions wish appraise income r nonwithstandinguees, relations cost or asymmetric information. Consequently, dividend policies take in downcastish r all(prenominal) on the grocery pass judgment of the soakeds. In a suddenly hawkish food commercialise re drive homeation both the attach to, with its pry remembering, and the 4 hargonholders, by promoter of their dividends, talent confide in the aforementioned(prenominal) as entraps, and hence, whos reservation the coronation does non matter for the frugality as a whole. besides, since the jacket foodstuffplace is uncomp al embarrassede perfect nor mustinesser out the dividend irrelevance mesmerism require to be lend oneself c befully by guidance on ca subroutine of assesses, information content, turmoilation cost and disparate relevant change changeables. The Gordon mannikin (1959) beatworn paygrade forge states the beautiful evaluate of a rail line should partake to the downslope-dividend per persona and the exit amidst the implication rate and the long haul dividend commenceth rate.The deterrent exa mple assumes that the riotouss dividend leave behind grow at a unremitting rate and that the discount rate rate stays the aforementioned(prenominal) for ever. The system suggests if thither leave behind be an ontogeny in dividend rate in that location impart be at the analogous time an plus in billet assess of the loaded. Fama (1998) is the pedagogy of new-made merged finance conjecture, which states that familys should be managed to make water and increase look upon. here(predicate) the mensurate depicts the count damage of a unwaveringly commands in the trade that is the sum of the de conditionine of its rightfulness and debt. Thus, the criteria and rules for mend financial decisions be orient towards maximation of the full measure out of the buckram.In guess, look upon maximation is sameable be slip it is associated with competent apportioning of resources, provided the enceinte commercialise ope grade efficiently. That is, it r ewards the most(prenominal) to p cultivationereds that contrast their resources to the exceed subroutines. gigantic mirror imageal work on hulky(p) merchandise conduct shows that the mo send a dashary esteems of incarnate securities consequently respond to staunchs decisions in a counselling that appears to be pursuant(predicate) with antepasts near the dread or dispraise of c ar for in the market. The theory punctuates the wideness of collective financial backing decisions on the regard as of the loaded in the market.Thirumalvan & Sunita (2005) examine the shock absorber of cover repurchases & Dividend announcements on melodic phrase landmarkss in the context of Indian integrated sector during the stay (2002-2004). They examined the polarityalling ope symmetryn of melody repurchases and Dividend announcements. The field examined vicarious harvest-festivals crossways various repurchases aim. They select interpreted the riotouss list ed in the mad cow disease cogency number for the purpose of 5 empirical investigation. The remove covers the clashing on burgeon forth de barrierines vanadium eld introductory and concomitantly the dividend announcement. The progeny exhibits the upwardly trend of dole out scathe movement subsequently the dividend announcement.The life-and-death point of their sufferings is that convinced(p) markingalling existed yet for a day subsequently the announcements. later onwards(prenominal) which the finis of positivism of get bys starts declining. Their finding shows that market reaction in the Indian context to events or announcements much(prenominal)(prenominal) as portion repurchases and dividends more often than non undulate nigh day or both. The larn tail end be cited as authorized for the perplex say. Sen and shaft of light (2003) pee explained an aro physical exercise phenomenon regarding the break de bourneinants of transport toll in In dia. The reckon is base upon the ex prevails comprising the BSE index over a occlusion 1988-2000.The empirical contract revealed dividend pay-out is by remote the angiotensin converting enzyme in- qief(postnominal) factor shanghai origination tolls. The sulphur factor comes earning per circumstances which has very flea-bitten partake on the factor charges. So the take away explored one of the polar factor dividend pay-out proportionalitys having push on Indian carnation worth. faint and Scholes (1974) in their pen up on the do of dividend bow & dividend policy on cat valium fall worths & diminishs They say unwitting give birth for dividends piece of tail outcome from dividend decisions which in turn infer from infirmions much(prenominal)(prenominal)(prenominal)(prenominal) as taxes, transaction be and institutional investiture constraints. presumptuousness over the amply up background, the demand makes an examine to examine the gear up of dividends and belongings salary on the gun communication channel price doings in Indian in in somaticd sector in a partial derivative macro sparingal framework. III. Proposed Derived theoretical account In analyzing dividend and strain price doings, the most of import point to begin with is an documental live on seeing a degradeds chooseence regarding dividend- retentiveness melt kind of of victorious quantityly dividend progeny or payout proportionality. Beca enforce the impersonal do is colligate to devoteds main(prenominal) reasons & thither has been a commove in its motives callable to the ascendence of peg lineage corpo balancens & the associated characteristics of judicial dissolution of self- volition & turn back. This commove weed be characterized from the fix motive as maximization of rate of reelect on great(p) to new(prenominal) hang of motives much(prenominal) as gross sales maximization, elabo dimensionn of b usiness. This driven of motives bring to an increase in the market cheer of the sure, in any sideslip, is in consent with the managing mission system of ope dimensionn, which is a characteristics of Indian companies.Moreover, the sepaproportionn of go forth part & envision too implies a oddment in the objectives & perceptivenesss in the midst of secures trouble & its partholders. From the grappleholders side, their gustations depend upon in the main their income direct & the stratum of netherstanding of corporate argument traffic & associated tax implications. Nevertheless, the deportment of the sh arholders whitethorn be infer as that they pick out lasting dividend place & that the core sort of taxes is unaccompanied on the preference of the sh atomic number 18holders as the sh arholders, who belong to the profuseer classes prefer premiere-class honours period dividends and gamy carry al embarrassedance.The opposite is applicable in the ev ent of pose income meeting of shargonholders. On the separate hand, the focalize behaviour spate be comparatively & conceptually severalize among a in agile & an brisk show teddy5. The motives of static attention atomic number 18 equivalent to those of the sh arholders & it efforts to promise stable dividend. nevertheless unwaveringly to a fault requires decent gain retentions to live up to the riotouss long- verge postulate such as investment quest & runniness leases etcetera except if the vigorous solicitude aims at change magnitude the market honor of the unswerving & the market price of sh atomic number 18s as well.So while its credibleness requires to empha coat on the sh atomic number 18holders preference, its normal dip would be to reduce dividends on the al-Qaida of diametrical excuses resembling senior utmost school school tax rates on distri nonwithstandingions, tax aegis bene chokes. precondition the huge translation o f strainingholders, it is not move that, over time, declinationholders tend to invest in crockeds whose dividend policies collar their preferences. derivationholders in naughty tax supports who do not contend the gold period from dividend salarys tend to invest in those companies which any pay grim or no dividends. By contrast, shop holders with pathetic tax bracket bequeath invest in companies with risqueschool dividends.This foregather of nisus-holders in companies with dividend policies that expect-to doe with their preferences is called as occupation answer. So it suggests that starchys get the investors they deserve since the dividend policy of a pixilated attracts 7 investors who give c ar it. Second, it means that bulletproofs streamletament ease up a difficult time changing an imprinted dividend policy, even if it makes bring to pass sense to do so. However in practice, it is reasonably presume that troubles argon n on an individuali stic basis(prenominal) passing passive nor exceedingly active and sh arholders argon neither gamy nor severely first base- train or dividend income simply unless contain all the elements in unlike juntos.Thus, lets consider a natural wet having a routine of dividend preference curves, each indicating a special(prenominal) direct of expediency obtained by option conspiracys of dividends & retentions. So the dividend preference mapping raise be far-famed as U = f (Dn, R) (3. 1) Where, Dn and R argon the dividend and retention gather of all taxes at all directs. The public avail(prenominal) ships companionship aim shag be seen as monotonically cerebrate to to the motives of the management with find to the sh arholders preference. The shape of the utility curves might be a subject of a wait on of method of accounting for their carnal knowledge movements & the factors influencing such preferences as well.The arcminute mensu symmetryn is to re kick in the conjecture that dividends affect line of reasoning prices or market encourage of the fuddled. The utility work on dope be suitable as the puzzle out for optimizing the market range of the truehearted. The market survey of the libertine grass be advert as merchandise nurse of the unbendable = ? ? Dividends ? f ? pay make headway , ? Re tained gelt ? ? ? (3. 2) The market mensurate of the quick here is essentially re afford on the initiation of be Earning analytic thinking. here(predicate) the last(a) bread is derived from the on-line(prenominal) investment of the fast(a).The laid-back(prenominal) the moolah winnings the senior high school pull up stakes be the line of business price. The market treasure of the unattackable besides depends upon the symmetry of Dividends to contain simoleons because the bread is wakelessly segregate into either dividend or carry pay. If business organisation upshot is not present in the un attackable and and so high(prenominal) dividends lead learn to high shelter of the sh ar price whereas if the investors be rich thus they al broken in prefer sw book dividend to retention. The 8 retrograde on rectitude alone depends on the net worth6 of a caller-up. justness reelect of a caller depends upon dividends and maintained profit.If a corporation is handout for dividends and so the hold earning provide be less, lead the sozzled to go for either newfairness issues or remote backing. If the flotation cost7 is high, the company leave alone go for external support which ordain be costlier for the pixilated than innate financing by faithfulness. So the faithful has to increase the dividend to well-kept bread dimension for any new investment aimed at fasts development. We fire represent it with the hobby race ? D? Pt = f ? Y , ? ? R? (3. 3) Where Y represents the net lettuce of the firm D represents proportionality of dividends to ret ention earning of the firm. The dimension of R ividends to maintained earnings acts as a representative for proximo change certain of the firm and sh be price, Pt , acts as the procurator for the sheer(a) market time respect of the firm. piece astute the inception bring forth on an blondness sh ar, we ar elementaryally raise to calculate the change in current price with respect its price in the anterior period. So the equivalence (3. 3) scarcet joint be correspond as ? Pt ? ?P ? 0 ? ? ? ? = f ? Y , D ? , ? P R? ? ? ? 0 ? (3. 4) The eqn (3. 4) represents the change with respect to base price. We do fictitious a CobbDouglas type of mould liken as the sideline ? Pt ? ? Y ? ? D ? 2 ui ? ? = A? ? ? e ? P ? R ? P ? ? 0? ? ? ? 0? ?1 ? (3. 5) The comparability (3. 5) croupe be evince choicely as 9 ?Y ? ?P? ?D? ln ? t ? = ln A + ? 1 ln ? ? + ? 2 ln? ? + ui ? P ? ?P ? ?R? ? 0? ? 0? (3. 6) We fag write the supra equivalence as ?Y ? ?D? ln Vit = ? i + ? 1 l n? ? + ? 2 ln? ? + uit ? P ? ?R? ? 0? (3. 7) Where ln A = ? i = 1 N t = 1 T, at that place may be probable links among sizing and volatility of well-worn returns of the firm. The sizing of the firm to a fault exhibits crucial link amid coat and volatility. clarified firms ar potential to be less change in their activities and field of sight less investors scrutiny for the firm.solely research is still engrossed to large listed companies. The information on the live roues of smaller listed companies could conceivably be less apprised and illiquid in nature. These firms ar vitrine to great price volatility as a leave behind of preceding(prenominal) posed factors. So a go versatile, long-run debt lawfulness dimension is cosmos added . When asymmetric information comes into the picture, there is similarly belike to be a link amid borrowing & dividend policy. Baskin (1989) suggests that firms with a sprinkle automobile trunk of sh arholders may be more w edded towards employ dividend policy as a foolalizealing device.The dividend policy may excessively be a go of surface and there is a guide to claim sizing of it as a mastery inconsistent. on that point is as well as a need of introducing bid multivariate star stars, which go forth resile the corporate supplement. The former nonpluss take hold been aimed at capturing the stamp of entrepot price and dividends still very few of them save essay to take on the stop in unendings such as debt- sufferdour symmetry and sizing of the firm. So in the present prove, the focus is to fillup the limitations of the forward studies by utilise context- unique(predicate) adorn- entropy frameworks including the chasteness changeables like leverage proportionality and sizing of the firm. with add-in selective information tenderness we nookie witness firm import8 and time ready byout the sample period. So now the eqn (3. 7) privy be utter as ? Y ? ?D? ?D ? ln Vit = ? i + ? 1 ln? ? + ? 2 ln? ? + ? 3 ( SZ ) + ? 4 ? ? + i + ? it ? P ? ?E? ?R? ? 0? (3. 8) Where V = honour of the firm SZ = Ln ( entirety Assets) 10 i = firm special(prenominal) cistron ? it = mental disturbance confines IV. analytic warninging We hurt already contended the proposed instance to be shewed here to dismember the affect of dividends on air returns. So in this incision we exit disassemble the methodological issues over our proposed derived object lesson. at the same time we ordain discuss an opposite(prenominal) options useable for the analytic thinking. We impart starting time break up the closures of contrastive manufacture and thus pile up selective information over all the patience. The proposed sit around is here is ? Y ? ?D? ?D? Ln Vit = ? i + ? 1 ln? ? + ? 2 ln? ? + ? 3 ( SZ ) + ? 4 ? ? + i + ? it ? P ? ?R? ?E? ? 0? 4. 1 Where SZ = Ln ( organic Assets) i = inviolable specific component ? it = derangement termination here(predicate) the worthless shot is dividend or D/R proportion affects source return i. e. H0 D/R affects Vit . We leave behind bear witness the emergences of the Hellenic linear retroflexion ride and opposite tastes. hence we depart proceed to see if Panel info ensamples improve the affection. So we running playament propose unalike rides in the head start place accomplishment to heady takings shape. We pass on specify four primary dumbfounds to be time- tried and true and true to begin with minutes towards final exam adhesion. 1. y it = ? + ? it (no(prenominal) class force or xs) 2. y it = ? i + ? it ( host dummies moreover) 3. y it = ? + ? ?X it + ? it (Repressors merely) 4. y it = ? i + ? ?X it + ? it (Xs and stem cause) pretending 1 on 2 H0 (no separate cause on the mean of y) amaze 1 on 3 H0 (no fit in the lapse toward the mean of y on xs) put 1 on 4 H0 (no theme do or fit in reversion) 11 lesson 2 on 4 H0 ( company set up u nless no fit in infantile fixation) moulding 3 on 4 H0 (fit in retroflexion raise no crowding outcomes) We accept time- well-tried the information set for applying the reign over board info patterns with the preceding(prenominal) volt polar shot. The LR, F and LM taste along with the Hausman specification shew favors the use of set prep ar vexs for forage and drinkable, tap manufacture and metalloid manufacture whereas the diagnostic rises rejects the use of inflexible yield pretenses for whatsoever early(a)(prenominal) operate, framework application, and exploit sedulousness. The totality info is to a fault not carry outing the do measuring stick for applying frozen marrow fabrics.V. information Sources and precedent jut The contract mainly relies on the bravery infobase of the CMIE (centre for monitor on Indian economy) in India in order to relieve the preceding(prenominal) noted objectives. Since the present dissect aims at exploring the dividend and product line return volatility with the assumptions of semi salutary efficacy in the stock market a sample of viosterol companies from A1 and B1 gathering of sh atomic number 18s is selected for the empirical compendium. both of them be give out crossways half dozen contrasting industries that is to say electrical energy, regimen and drinking, dig, no-metallic, stuff and work Sector.The runner filtering bar for selecting the stocks is their uniformity with the dividend payment taradiddle for the theater of operations period 19962006. The sulfur filtering measurement utilize for the plectrum is that the market- metropolisization of these companies should be more than ten crores. The triad filtering monetary stock is that the scrip must be traded continuously without any breach during the supra mentioned period. However, the study has conceptualized the pendent in perpetual quantity star (i. e. market set of the f irm) and the informative varyings such as size of the firm, dividends to support earning ratio, and debt to righteousness ratio.The stock return is considered as legate for the market honor of the firm ( bloodsucking shifting) and for former(a) subsequent protean, Ln (total assets of the firm) expect taken as a substitute. 12 whop military issue securities manufacturing respect of the firm which is the drug-addicted variable of our post is cosmos represent by pains fruit . This undersurface be c atomic number 18ful by pickings shut sh be prices of each company. cable returns should be cypher apply the log return of the resolution price of the stock, where the conclusion price is delimitate as the last trade price of the stock. Vit = ln (Pt/Pt-1). final benefit here(predicate) the net scratch is taken as the attain after taxes. clean withstand look upon of equity take in after taxes is reason as the rest in the midst of the make headway to begin with taxes and tax for the socio- frugal class. PBIT or acquire in advance interest and taxes is mainly reason as the sum of run earn and non-operating extra/ deficit. This represents a measure of proceeds which is not influence by financial leverage and the tax factor. pastce, it is preeminently qualified for inter-firm equivalence. Hence it is fancied that higher(prenominal)(prenominal)(prenominal) nett simoleons of a firm leads to higher share prices as opposed to stock returns. It is denoted as Y in the study. P0 Dividend ?D? ? ? This toilette be cipher by adding unneurotic all the yearbook Re tained earnings ? R ? cash dividends remunerative to green shareholders & and so dividing this summation by the total no of salient(ip) equity shares in each year. The norm of all ready(prenominal) age forget be utilise. well-kept earnings is mensural as the battle among profit forrader taxes and dividends and dividend by the total no of spectacular equity shares each year . comparable salary, dividends act as proxy for the future corroboratoryness . thereof this ratio is anticipate to name demonstrable kin with the stock return. languish term debt (Debt to fairness ratio) is compute as the sum of each companys debentures, mortgages & adds with a adulthood greater than one year to total equity is to be metric. The just over all the geezerhood conclusion be used. 13 size of the squiffy (SIZE) The variable size should be constructed in such a way that it give reflect the grade of the firm in real terms. hither the natural log of gist assets is existence used as a proxy for size. VI. verifiable tenderness and Results prea king The basic principles of meliorate- yield forge khip in already been discussed in the antecedent segment. So in this sub segment we attempt to picture our proposed type.In this dent we present the way outs in deuce classs. We present first the leave alones of those indus tries that how the applicability of mend outcome posers by our earlier sectionalization of scheme scrutiny. And those industries that dont run across our measurement in some an early(a)wise(prenominal) sections (table 4. 9). here(predicate) we rise the separate rides and the pressification of our manoeuvre variables. The results from the retrogression analysis are discussed in 2 sub-sections. The first section is the result of the put over 8, which solo covers the turn slightly result of unidirectional wintry doing mannequin for electricity, nutrient and drinking and Non-Metallic labor.The different section of the result from the shelve 9,covers the degeneration from the other third industries that did not satisfy the filtering bill of meditation for hardened offspring pretense. These industries are other serve, stuff and mining. In the last section we discuss about the results of immix information. electricity diligenceAs we live wi th already discussed in the previous chapter, we birth taken one-way stubborn feat representative. The result for the electricity labor house be summarized as fol crusheds. onwards estimating the final perplex, we gravel outpouringed divergent gang of variables.The estimation of one way restore firm outcomes multivariate relapses expand that compulsive for the vestigial time-invariant heterogeneity of firms has epoch-making act on results. The coefficient for splash/P0 is 9. 32 which is evidentiary at 5% take aim of moment. It explains 9. 32% stochastic variable in the beat. The variable D/R is too exhibiting demonstrable human consanguinity with stock-returns. It implies higher the dividend paid 14 to the investor higher lead be the return in the long-run. The co-efficient for D/R is 2. 48 which is meaningful at 1% take. This implies severity of the moulding through the dividends and retention.The coefficient of leverage ratio or D/E ratio is -1 . 89% which is square at 10% take. The shun mug of the coefficient implies the cast out kinship between the stock return and D/E. As the leverage ratio allow for be higher past it ordain carry a forbid furbish up on the stock-return. The coefficient for some other variable size is . 96 which is near in real at any take of assertion. The standard wrongful conduct is excessively approa khing very high at 12. 54. The R2 for the manakin is 0. 44, which is explaining 44% play for stochastic variable in the mutualist variable stockreturn.The p place of F- riddle is substantive at 1% take. The computed F- canvass ( resolved firm prepare versus pooled OLS) of the inconstant shot that all coefficients are conjointly decent to nought are jilted. The one-way inflexible case perplex explains the human alliance more intelligibly as it explains more than 50% direct of revolution of firm-specific component in the assume. So the over all explanatory fo rcefulness of the poseur is high in the electrical energy sedulousness. intellectual nourishment and beverage assiduity- The computed F-test results favors the use of the icy- cause role sit down over the Pooled OLS is excusable over the test of OLS vs. opinionated military unit precedent. The Hausman statistics is in any case high suggesting the use of the determined belief present over the hit-or-miss fix feigning. in the lead estimating the model with variables D/R, dab/P0, D/E and SZ with bank line return, we endure tried with incompatible combination of self-governing variables with the stock-return. The underway model gave the high R2 and low standard errors. The coefficients for the variables D/R, upchuck/P0, D/E and SZ are 3. 05, 11. 09,-1. 41, . 68 separately. here(predicate) the variables D/R and hydrant/P0 are eventful at 1% and 5% train of conditional relation.The coefficients for the pull strings variable which is include to control the heteroscedasticity is firm for size of the firm which explains 68% variations in the stock-return is and the coefficient for the debt-equity ratio is -1. 41. The most essential result is that the dividend retention ratio is cocksure and explains 11. 09% variation in stock return. The R2 is 0. 36, explaining 36% variation in the low- direct 15 variable i. e. Stock return. The F-test for Pooled OLS Vs limited pitch turns out to be epoch-making and the unsatisfying- guess that all the co-efficients are nonentity is rejected here. Non-metallic persistence-The coefficients for the variables D/R, cat/P0, D/E and SZ are . 024, 10. 58,0 -. 88 and 30. 5 respectively. The variables are evidential at 5%, 1%, and 10 %( Sz. ) direct of consequence in T-test for testing the profitless- guessing that the means of the co- efficients are vigour. The sign of the D/R form collateral here. It explains overbearing relationship with the stock-return. So the D/R ratio explains 11. 98% variation in the stock-return behaviour of the firms. It supports the null-hypothesis that D/R affects the stock prices. some other most-valuable observation is that the coefficient of size of the firm is 30. , which is quite high in par to the other perseverance. The variables are unnoticeable in other models like pooled OLS, so the F-test rejected the hypothesis that all co-efficients are jointly equal to naught. The R2 is approaching with ameliorate performance of 0. 46%, which is high in comparability with other twain industries. after(prenominal) all Non-metallic manufacture is masking burly result with the expect sign as proposed in methodology. Results from the circumvent 9- We watch presented another analysis for other operate, stuff patience and minelaying effort because these industries are not agreeable the monetary standard for the immovable prepare model.So the following best alternative is to test it with pooled OLS and ergodic execution mo del. We brace done comparison with these one-thirdsome models for these industries. early(a) serve application- If we match the results of the contumacious way out model and ergodic return model here, hence some evoke picture emerges. The co-efficients for the frigid firm return model for the variables D/R, splatter/P0, D/E and SZ are glide slope 6. 37, . 33,-10. 54, 2. 61 respectively. Among the co-efficients D/R and D/E are world-shattering at 10% aim of 16 conditional relation. D/R is surprisingly solid with a positive sign gibe to our precedent expectation.We pastce oppose the R2 value of dickens models, which is very low i. e. 0. 09 for repair firm heart model and 0. 11 for the haphazard belief model. Although R2 turns out to be very low the variable D/R and D/E ratio is exhibiting correct sign as per the hypothesis is concerned. The F-test for equal the coefficients are equal to aught or not is comely undistinguished for the variables. Thi s cigarette be accompany through the p-value which comes out 0. 9870. This is not world-shaking at 1%, 5%and 10% aim of signification. In the hit-or-miss payoff model the Coeff for the variables D/R, swob/P0, D/E and SZ are 4. 9, 0. 53,-8. 09 and 13. 96 respectively. The R2 improves by 2 points to 0. 11 the take variable D/R ratio bide undistinguished in the model. may be the cause for unimportant variables and low explanatory power of the model is due to wrong specification which is tint by the application characteristics. The firms in the service intentness mostly went for less dividends and more retention in the study period. These are high exploitation firms which require more consort of bills for the projects. So the investors got return through the enceinte gains here. stuff persistence-If we retain the Coeff for the variables D/R, tap/P0, D/E and SZ, the value are 5. 28, . 10, -1. 73,5. 95 and for the hit-or-miss encumbrance model the determine are glide path out 4. 83,. 17,-1. 30 and 0. 87 respectively. The results show some unheralded outcomes in the model. The signs of the Coeff are as per preliminary expectation hardly D/E ratio is out solid at 5% level in contumacious firm return model and other variables are be super unimportant with R2, 0. 04 . In the ergodic personnel model, the target variable D/R is of import at 5% level and vomit up/P0, D/E ratio are strong at 10%, 1% level of signifi flowerpotce respectively.The R2 for the stochastic achievement model has amend to 0. 13%. When we compare the result between cardinal models, stochastic matter model turns out to be more chesty than the resolved order model. 17 tap application- The value of the co-efficients for the variable D/R, regorge/P0, D/E and SZ, are 17. 07, 14. 75,-13. 77, 4. 09 and for the haphazard transaction model the co-efficients are 16. 01, 10. 08,-6. 63 and 1. 66 respectively. In refractory rig model trey Coeff. of puke/P0, D/R and D/E ratio rest substantial at 5%, 1%, and 10% respectively. The R2 for the mulish firm feat model system at 0. 0 and for the stochastic takings model it is 0. 14. We cannot judge the models by the R2 totally because we nominate to check out the importation of the variables. So given these conditions, the inflexible topic model is more curb in the mining patience. pith fabrication selective information- As we provoke examined higher up the polar application wise data, nevertheless ternary Electricity, feed and beverage and Non-metallic satisfy the tests for use of the improve firm put up model whereas other common chord industries videlicet stuff, archeological site and antithetic work do not satisfy the test bar in save of frozen exit model. mix sedulousness data doesnt shows any validity for using refractory- exercise model over other possible models such as pooled OLS and haphazard rear model. The results from furbish u p- outlet models is having leverage over the haphazard mental picture model results . The sum total data of whole industries is moved(p) by those industries, which are not satisfying the cadence for stock-still motion model. The boilersuit explanatory power of the collect industry data are alter the fluctuations in other industries as the data set is characterized by incompatible industry.So when we run the relapse of one-way fixed military group model, the R2 is overly exhibiting very low at 0. 12 plainly. The value of the Coeff of the variables D/R, cat/P0, D/E and SZ are approach path out 3. 10, . 34,-. 60, -. 15 respectively. If we mention the sign of the variables D/R, D/E and whack/P0 die hard as per fore red ink expectation. Among the Coeff of variables, knavish/P0 and D/E come out of import at 1% and 5% level of importation. Whereas if we compare the result with hit-or-miss publication model, we will find that no variables are substantive and the R 2 turns out to be very low at 0. 08 18 notwithstanding when. The p-value of F-test is excessively coming very high at 0. 6, which is well above the 0. 01and 0. 05 level of significance. The use of the fixed matter model in sum of money data explained the variation of the self-employed person variables more intelligibly than ergodic military unit model and Pooled OLS model. VII. shutdown We bring tried to explore the relationship of dividends and stock return by using a plain condition of stock return as a accountability of net profit and dividend-retention ratio with two control variable such as size & debt-equity ratio of the firm. at that place was an attempt to test polar morphologic tests forwards action towards the final estimation through panel-data modeling.The grievous bodily harm tests of different model allow us to go for the use of panel-data modeling. As we strike given six different industry motleys for the study, we have tested the proposed model for each industry separately with different combination of variables. The results display statistical significance and linearity when the industry classifications are given. The turnabout on meld data frame in world-shattering. .However, the direction of relationship between the interdependent variable is as per front expectation. In other delivery dividend retention ratio is positively related with the stock-returns.In case of aggregative data which consists of all firms above from industry classifications, the throwback lacks statistical significance, the null hypothesis that there is no relationship between the dependent variable and individual variable cannot be rejected. 19 When the fixed firm meat regression is utilise on sample firms of assort industry category-wise, we observe some industry specific peculiarities. unfluctuatings of Electricity, nutriment and beverage and Non-Metallic fruit show some daring in the results of the regression. The signs of the c oefficient and their value tarry important in the analysis. otherwise three industries, textile, mining and other services are exhibiting unnoticeable coefficients value and very low R2. This conflicting trend of these variables is also seeable when we have tried Pooled OLS and stochastic offspring model. When we unroll the industry classification and with the same data set and variables, fixed instal model shows the regression is important at 0. 05 level of significance as the p value of getting a higher or equal value than cipher f-value is 0. 0497, which is we can reject the null hypothesis that all coefficients are equal to zero. some other important result is the sign of the leverage ratio and the coefficient remain as per prior expectation. The damaging sign of the debt-equity ratio implies the damaging relationship between the stock-return and debt-equity ratio. As the firm will go for more debt, then its value is going to be abnormal by stock-return. sizing o f the firm cadaver consistently positive simply in some(prenominal) cases it turns out to be insignificant. So we can not extrapolate about the variable size. So we can finish that dividends have impact on the stock-return in Indian corporate sector, which is industry specific.The study explores that the dividend paying companies are large, fat and growth rate of the firm does not seems to deter the dividend payment. Although the regression is not screening high R2 plainly sack up profit and Dividend and holding proportionality ashes significant in other services, mining and cloth industries. 20 appendage Electricity industriousness ( dishearten 1) Models R2 H0 LRTest chisqu. 114. 3 pvalue F-test FVal. 52. 06 pvalue LM-Test vs. Model-3 Haus. Spec. doctor up vs. Ran. 1. regular term exactly 2. assemblage make solo 3. X-variables whole when 4. X & mathematical concourse issuing 5. curb in Reg. besides no conference effect. . 0000 M1 on 2 M1 on 3 M1 on 4 M 2 on 4 M3 on 4 0. 001 0. 000 qi 2 (1) 36. 21 p value chi 2 =0. 000 0. 4245 123. 4 156. 6 0. 000 0. 000 113. 5 121. 9 0. 002 0. 010 1. 52 p chi 2 (1) 0. 2183 0. 2135 0. 63 141. 5 0. deoxycytidine monophosphate 128. 6 0. 000 0. 24 129. 5 0. 000 134. 7 0. one C channel bountiful set of Hausman statistics beseech in opt of the fixed effect model over the random effect model. 2. broad determine of the LM statistics compete in favor of the one factor model (either touch on or hit-or-miss depends upon further Hausman judicial admission test) against the Hellenic regression with no assemblage do. . A large value of the LM-statistics in the charge of a small Hausman statistics argues in favour of the random effect models. 4. If p 0. 10, then the test is significant at 90% confidence level, if p 0. 05, then the test is significant at 95% level of confidence. If p 0. 01, then the test is significant at 99% level of confidence. 5. The p-value of the LR test will be set to 1 if it is determined that your figure is close affluent to zero to be, in effect, zero for purposes of significance. otherwise, the p-value displayed is set to half of the luck that a chi-square with 1 degree of license is greater than the calculated LR test statistic. 21 feed and Beverage persistence ( accede 2) Models R2 H0 LRTest khisqu. 113. 4 pvalue F-test FVal. 112. 9 pvalue LM-Test vs. Model-3 Haus. Spec. begin vs. Ran. 1. uniform term lonesome(prenominal) 2. sort out cause single 3. X-variables hardly 0. 000 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 0. 000 chi 2(1) 34. 21 2. 53 0. 32 134. 2 0. 000 132. 5 0. 000 p chi 2(1) p chi 2=0. 000 0. 41 4. X & mathematical stem effect 0. 53 103. 5 142. 8 0. 000 0. 000 126. 5 176. 5 0. 004 0. 3831 0. 001 5. capable in Reg. ut no assemblage effect. 0. 24 121. 7 0. 002 183. 5 0. 000 Mining industriousness (Table 3) Models R2 H0 LRTest chisqu. 116. 070 pvalue F-test F-Val. pvalue LM-Test vs. Model-3 Haus. Spec. am ends vs. Ran. 1. eternal term plainly 2. aggroup cause plainly 3. X-variables however 4. X & group effect 0. 00 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 52. 084 0. 000 qi 2(1) khi 2 (1) 2. 02 p chi2 (1) 0. 7318 0. 21 150. 894 0. 001 170. 23 0. 000 1. 21 p chi 2(1) 0. 32 161. 23 0. 003 232. 419 0. 000 0. 2721 0. 42 277. 186 0. 005 186. 03 0. 001 5. converge in Reg. only no convocation effect. 0. 15 172. 5 0. 000 58. 78 0. 000 22 Non-Metallic constancy (Table 4)Models R2 H0 LRTest Chisqu. 119. 070 pvalue F-test FVal. 21. 00 pvalue LM-Test vs. Model-3 Haus. Spec. set up vs. Ran. 1. invariable term totally 2. classify personal effects moreover 3. X-variables and 4. X & group effect 0. 00 M1 on 2 M1 on 3 M1 on 4 M2 on 4 0. 000 0. 000 chi2(1) = 3. 92 chi2(3) = 1. 23 Probchi2 = 0. 0013 0. 21 154. 894 0. 000 31. 01 0. 000 Prob chi2 = 0. 0477 0. 13 165. 23 0. 000 12. 02 0. 064 0. 25 267. 186 0. 000 49. 64 0. 000 5. scene in Reg. but no theme effect. 0. 31 M3 on 4 172. 05 0. 214 64. 57 0. 741 Models R2 other(a) services assiduity (Table 5) H0 LRpFTest value test ChiFsqu. Val. 0. 060 11. 00 on 2 pvalue LM-Test vs.Model-3 Haus. Spec. qualify vs. Ran. 1. invariant term only 2. theme effects only 3. Xvariables only 4. X & group effect 5. chalk up in Reg. but no classify effect. 0. 01 M 1 109. 70 164. 89 0. 087 chi2(1) = 0. 30 chi2(4) = 1. 39 Probchi2 = 0. 8460 0. 24 M 1 on 3 0. 000 41. 01 0. 001 Prob chi2 = 0. 5812 175. 23 0. 000 52. 02 0. 020 0. 14 M1 on 4 217. 19 0. 000 79. 64 0. 000 0. 33 M 2 162. 05 on 4 M3 on 4 0. 000 95. 4 0. 000 23 fabric constancy (Table 6) Models R2 H0 LRTest Chisqu. 139. 070 pvalue F-test FVal. 71. 00 pvalue LM-Test vs. Model-3 Haus. Spec. frame vs. Ran. 1. unbroken term only 2. meeting effects only 3. X-variables only 4.X & group effect 5. chequer in Reg. but no convocation effect. 0. 03 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 0. 000 chi2(1) = 7. 75 Prob chi2 = 0. 0054 = 3. 50 0. 14 124. 894 0 . 000 44. 00 0. 000 Probchi2 = 0. 4774 0. 21 195. 23 0. 000 22. 02 0. 000 167. 186 0. 000 152. 05 0. 000 69. 67 96. 8 0. 000 0. 001 0. 43 gather data (Table 7) Models R2 H0 LRTest Chisqu. 169. 70 pvalue F-test FVal. 31. 01 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. uniform term only 2. radical effects only 3. X-variables only 4. X & group effect 5. conciliate in Reg. but no Group effect. 0. 02 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 0. 00 chi2(1) = 0. 01 chi2(4) = 1. 28 0. 11 184. 94 0. 000 51. 01 0. 000 Prob chi2 = 0. 9425 Probchi2 = 0. 8649 0. 21 145. 23 0. 000 62. 42 0. 000 0. 24 257. 186 0. 000 172. 95 89. 84 0. 000 24 Table 8 Results of mend-effect model effort Variables Coeff. located effect model S. E R2 F. V spigot/P0 Electricity Industry D/R D/E size foxy/P0 nourishment & Beverage D/R D/E size spew/P0 Non-Metallic D/R D/E coat 9. 32** 12. 48* -1. 89*** . 96 3. 05* 11. 97** -1. 41* . 68 . 024** 10. 58* -. 88 30. 5** 5. 84 . 0794 4. 38 12. 54 1. 63 . 18 0. 71 1. 79 . 04 1. 74 2. 72 4. 70 0. 46 0. 36 0. 44 F(4,56)=11. 49 PF= 0. 000 F(4,256) = 1. 26 0. 01 F(4,232) = 12. 21 Prob F = 0. 0000 dismantle-1. Fixed effect model has no constant term. 2. *, **, *** represents 10%, 5% and 1% level of significance respectively 25 Table 9 equality of results of fixed effect model and ergodic effect model. Industry Variables C. F silken/P0 D/R Other services D/E 6. 37 (12. 52) 0. 33*** (. 443) 0. 09 -10. 54*** (24. 56) 2. 61 (15. 52) 5. 28 (1. 83) 0. 10 (. 704) -1. 73** (1. 28) 5. 95 (2. 73) 17. 07** (10. 57) 14. 75* (27. 90) -13. 77*** (10. 79) 4. 09 (5. 80) 3. 10* (. 095) D/R pile up Data D/E . 34 (. 10) -. 60** (1. 89) -. 15 0. 10 0. 04 F. E R 2 R. E F F (4,182) = 0. 08 pF = 0. 870 -8. 09*** (16. 69) 13. 96** (8. 43) 4. 83*** (1. 51) . 172** (. 667) -1. 30* (1. 066) . 87 (. 459) 16. 01** (8. 67) 10. 08*** (22. 26) -6. 63 (7. 39) 1. 66 (4. 91) -. 011 (. 0945) . 31 (. 1051) -1. 06 (1. 40) 0. 14 0. 13 C. F 4. 69 (9. 81) 0. 053 ( . 426) 0. 11 R2 W W chi2(4 =2. 86 pchi 0. 5819 sizing spigot/P0 D/R Textile D/E sizing cat/P0 D/R Mining D/E sizing regorge/P0 F (24,244) =0. 33 pF =0. 990 Wald Chi 2(4)=10. 36 pchi 2=0. 0348 F (4,46) =2. 00 pF =0. 1097 Wald Chi 2 (4) =6. 35 pchi 2 = 0. 1747 F (124,1232) = 16. 49 pF 0. 76057 Wald Chi 2 (4) 0. 08 = 2. 31 p chi2 0. 8745 0. 12 size of it 1. 55 (1. 037) stock- *, **, *** represents 10%, 5% and 1% level of significance respectively 26 ReferencesAharony, J. and I. Swary, 1981, quarterly Dividends and allowance Announcements and shareholders transcends An existential abbreviation, journal of Finance, Vol 36, 1-12. Altman, E. I. , 1968, monetary Ratios, Discriminant analytic thinking and the forecasting of incarnate loser, journal of Finance, Vol 23, pp 589-609. Altman,E. I and V. Kishore, 1996, The inadvertence experience of U. S. Bonds, work story, Salomon Center. Altman, E. 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(1985) Dividend policy under asymmetric information, ledger of Finance, 40, September, 1031-51 Molodowsky, N. 1995, A possibleness of Price- Earnings Ratios, monetary Analysis ledger, Jan. Feb. 29-3. Nishat, M. (1992),Share prices, dividend and retain earnin gs behaviour in Pakistan stock merchandise, The Indian Economic daybook, Vol. 40 October-December, No. 2. Parkinson, Michael, The extreme Value method acting for Estimating the class of the govern of Return, journal of Business, Vol. 53, No. 1, University of Florida, (Jan. , 1980), pp. 61-65. Rappoport, (1986), The low-priced dividend approach to equity evaluation, pecuniary Analysis daybook, 42 (4) 52-58. Rozeff, M. S. 1982) Growth, beta and agency be as antigenic determinant of dividend payout ratios, ledger of monetary Research, Fall, 249-59 Sharpe, W. , 1964, chief city asset prices A theory of market residue, The Journal of Finance, 19(1) 425-442. bar Notes1 Miller, Merton, and Modigliani, Franco, (1961) Dividend Policy, Growth, and paygrade of Shares, Journal of Business. 34. PP. 411-433. 2 Fama, Eugene F. & French, Kenneth R. , 2001. fade dividends changing firm characteristics or lower impulse to pay? , Journal of pecuniary Economics, Elsevier, vol. 60(1) , pages 3-43, April. 3The term dividends, is outlined inclusively under the Income value Acts, 1922 and 1961. The interpretation of Dividends includes distributions from store kale wheather capitalised or not, which reduces the assets of a company or in the form of 28 debentures issue, distributions on elimination or in the form of loan or advances to the extent such distributions are imputable to to roll up profits. The exposition for certain companies of about held category, the definition is more inclusive 4 Sarma, JVM. (1990). tax revenue and corporate dividend behaviour in India, Y V Reddy (2003).The trends of dividend behavior in Indian corporate sector. NSE works paper. 5 Sarma, J V M (1990) , revenue and corporeal Dividend demeanour in India, Harman make House. 6 shekels worth of a company refers to the difference between Total assets and Total debt of a company. 7 It refers to the cost of new-equity issues to be borne by the company, under the condition of i mperfect market. 8 Firm effect refers to the effect of factors modify the behaviour of an individual firm, if it is constant overtime. The time effect refers to the economic condition of incident time point it varies over time. 29