A Comprehensive Review of Dividend Policy Determinants and Their Impact on Corporate Performance and Shareholder Wealth Across Emerging and Developed Markets

Abstract

This study explores the impact of dividend policy on corporate performance, shareholder wealth, and market valuation. It aims to understand dividend payment patterns, explore determinants of dividend payout, assess retained earnings' impact on profitability ratios and shareholder wealth, and evaluate dividend policy's influence on firm market value. Factors influencing dividend payout include profitability, company size, development prospects, liquidity, and taxation policies. Retained profits are crucial for reinvestment and long-term growth, and they significantly influence shareholder wealth by increasing equity value or financing strategic investments. The study also explores the influence of dividend policy on market valuation, highlighting the relevance of signalling and agency cost hypotheses. Dividend payments impact investor views, diminish uncertainty, and influence stock prices across sectors. The report highlights the need for further research on the long-term effects of dividend programs, identifying gaps in emerging economies and under-researched sectors. This review provides a foundation for improving financial strategies for improving corporate performance and maximizing shareholder value.