Dividend dynamics and shareholders’ wealth: An empirical investigation based on NSE100 companies

Abstract

This paper provides a comprehensive analysis of the relationship between dividend policy and shareholders' wealth and the impact of dividend policy on shareholders’ wealth. Dividend policy, a critical aspect of corporate finance, plays a pivotal role in shaping the financial landscape of a firm. Though thousands of researches in developed and developing nations have been done in this areastill there is puzzle whether paying dividends influences shareholders’ wealth in a significant manner or not. The research attempts to shed light on the dynamics of the relationship between shareholders' wealth and dividend policy in the Indian context. The data for the study is gathered from the PROWESS IQ Database of CMIE consisting of 60 non-financial listed firms in NSE100 for 7 years i.e. 2017-2023. Correlation analysis is done to identify the relationship among DPS, DY, RPS, and EPS showing significant positive association among them. Using panel data and applying fixed effect model, the analysis shows there is significant positive impact of DPS & RPS on EPS.