Dividend policy determinants: An investigation of the influences of stakeholder theory

This paper investigates the relationship between the dividend-policy decisi ons and investment decisions of a firm. Recent literature proposes a theory that links the two decisions. This link is stakeholder theory, which views the firm as a nexus of contracts and includes both investors and non-inves tors as stakeholders of the firm. By using a proxy for the level of non-inv estor stakeholder influences, our research finds that a relationship does e xist. This is indicated by the firm having a lower dividend-payout ratio, w hich indicates its ability to make good on the implicit claims of non-inves tor stakeholders.