Factors Affecting Dividend Decision of Indian Cement Industry

Abstract

Dividend decision is one of the most important functions of finance managers. It
depends on the trend of the turnover and control of the management over the
expenditure. It also affects the decision of potential investors regarding investment in
company’s equity and overall market value of the company’s share. In this paper, an
attempt has been made to ascertain influence of the factors i.e. Total Assets, Liquidity,
Inventory Turnover Ratio, Profitability and Retained Earnings on the dividend
decision of Indian cement industry for a period of 2004-05 to 2008-09 based on the
secondary data of 28 data of 28 out of 36 listed public companies in the industry. The
study finds that significant increase in the selected factors influences the dividend
decision to the great extent rather than the factors which have resulted marginal or
moderate increase. It is also found that change in Total Assets and Profitability
affects dividend decision positively; while change in Liquidity, Inventory Turnover
Ratio and Retained Earnings affects dividend decision negatively.