ESTIMATION OF DIVIDENT POLICY ON AGGREGATE AND FIRM'S LEVEL: ARE DIVIDENTS IMPORTANT FOR THE RESIDENCE SHAREHOLDER

As part of the firm’s general policy, dividend policy deals how the net-earnings aftertax are distributed among the shareholders. This article explores the impact ofdividend policy on the share price of the firm. Historically, two major academicstreams prevailed in finance concerning the dividend policy: the proponents whoadvocated its importance; and the opponents who defied it. The basic methodologicalframe used is consisted of the Gordon’s model for evaluation of stock priceselaborated in his work “Dividends, Earnings and Stock Prices”. Two approaches werefollowed during the course of our research: macro-analysis with aggregate data; andmicro-analysis with individual data. The application of the Gordon’s model onaggregate data didn’t reveal the true relationship between the policy of distribution ofearnings and the movement of reference price index MBI-10. Further analysis of themacro approach detected a handful of possible reasons that led to the inconsistentoutcome. Conversely, the regression with micro-data generated significant resultsproving that Gordon’s idea for the relevance of dividend policy is still “alive” at leastfor the single resident company