Determinants of Dividend Pay–Out Ratios – A Study of Pharmaceuticals Companies

Abstract :

Profitability has always been considered as a primary indicator of dividend pay out ratio. There are numerous other
factors other than profitability also that affect dividend decisions of an organization namely cash flows, corporate
tax, sales growth and market to book value ratio. Available literature suggests that dividend pay out ratio is positively
related to profits, cash flows and it has inverse relationship with corporate taxes, sales growth and market to book value ratio. This paper is an
attempt to empirically analyze the determinants of dividend pay out ratio of Indian Pharmaceuticals industry. The current study focuses on the
determinants of dividends and its performance of select pharmaceutical companies in India. This study evaluates the performance of various
pharmaceutical companies and their annual compound growth rate.

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