An Empirical Study on the Determinants of Dividend Policy in the UK

The objective of this study is to find out the determinants of dividend policy in the UK for the non-financial companies in the year from 2002 to 2011. The dividend policy is one of the most debatable issues in the corporate finance literature and still keeps its prominent place both in developed and emerging markets. Dividend policy is one of the most intriguing topics in financial research. Even now, researchers still have enthusiasm to solve the dividend puzzle, resulting in a large number of hypotheses, theories and explanations. Among the researches in the area of dividend policy, the determinant of it is most popular. The study firstly introduces the background of the corporate dividend policy and then review the literatures related to the dividend theories and determinants of dividend policy. As concern as this study, particularly, examines the extent to the company characteristics influence the corporate dividend policy. The company characteristics include company profitability, company size, debt level, liquidity, growth and tangibility. The Forecasting Analysis and Modeling Environment (FAME) and annual reports of chosen companies are used as the source to collect the data for the study. Multiple Regression Model is used to analyze the data. According to the sample of 60 UK non-financial companies of 6 different industries, the profitability and company size are the significant determinants to the corporate dividend policy. However, in different industries, the determinants differ as well