What determines a company’s dividend policy
Dividend policies are generally driven by the needs of the business. The stage of maturity of the company can play a role. Younger companies, which are still growing, could prefer to deploy capital in acquisitions and expansion opportunities.
Dividend policies also often differ based on tax regimes. If the tax regime is favourable, controlling shareholders could decide to distribute themselves dividend rather than pay salary.
In environments where bank funding is easy to get, companies can be more generous in paying dividends as they can turn to banks for their funding needs. This can be country and company specific....
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