Journal Press India^®

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Dividend policy has been an issue of interest in financial literature since Joint Stock Companies came into existence. Dividends are commonly defined as the distribution of earnings (past or present) in real assets among the shareholders of the firm in proportion to their ownership. . Dividends are usually given as cash (cash dividend), but they can also take the form of stock (stock dividend) or other property. Dividend payment affects a significant impact on wealth of shareholders of accompanies. However, some theories such as the Miller-Modigliani hypothesis theory say thatdividend has no relevance on value of firms. On the other hand Walter and Gordon propagated a theorywhich supposed that investment policy and dividend policy of a company are interlinked andsignificantly affects price of its shares. This descriptive research proposes to test the Walter and Gordontheory by analysing the impact exerted by dividend policy made by companies on prices oftheir shares. The study is based on secondary data, pertaining to share prices of companies indexed inBombay Stock Exchange (BSE), which have made dividend policy. For the result of the study researcher analysed the data by using the Statistical package of SPSS, employing the statistical tool of T Test Analysis. Resultsof the study reveal that a dividend policy exerts a significant impact on share prices ofcompanies.

Keywords

Dividend; Share Price; Dividend Policy; SENSEX

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