Dividend policy: a review

Purpose - This paper aims to briefly review principal theories of dividend policy and to summarize empirical evidences on these theories. Design/methodology/approach - Major theoretical and empirical papers on dividend policy are identified and reviewed. Findings - It is found that the famous dividend puzzle is still unsolved. Empirical evidence is equivocal and the search for new explanation for dividends continues. Also a number of stylized empirical facts about dividends discovered by researchers are noted. Research limitations/implications - As with any review paper, the major limitation is that necessarily some papers will be left out. Also as newer research is published the review paper will become more dated. Originality/value - This paper will give the reader a comprehensive understanding of the dividend puzzle and the major paradigms of dividend policy. The paper will also give the reader the major stylized facts about dividend policy.