Dividend Policy and Earnings Management: An Empirical Study of Listed Companies in India

Dividend Policy and Earnings Management: An Empirical Study of Listed Companies in India

Sanjit Sarkar

Research Scholar

Kazi Nazrul University, Asansol, West Bengal, India

Executive Summary

Creating a dividend policy is a considerably important duty as this influences shareholders to invest more in the company. The primary aim of the study is to investigate the importance of dividend policy to enhance the power of earning management and help to improve organisational profitability. The identified objective of the study is to find out a comparison of the dividend policy between large and small firms in the case of earning management. However, in case of a manager is unable to meet identified profit target through earning management. Additionally, enterprise value negatively influences dividend payouts. This assignment has adopted the following methods, research design (descriptive), research philosophy (interpretivism), research approach (inductive), data collection method (secondary), data analysis method (thematic analysis) for the collection of data and structuring this study. The adopted method have helped in accurate interpretation of information and reaching conclusion. The results highlights that dividend policy imparts positive impact on the organisation and assist in leveraging financial decisions and earning management. The recommended strategy is fixed divided per share which allows earning stability.

Keywords: Dividend policy, Earnings management, Organisational profitability, Dividend pay-out ratio