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The Development of Company Dividend Policy in Respect of Profit Distribution Priorities

Author(s): Vilija Aleknevičienė | Povilas Domeika | Dalia Jatkūnaitė

Journal: Engineering Economics
ISSN 1392-2785

Volume: 5;
Start page: 17;
Date: 2006;
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Keywords: dividends | dividend policy | share market price | profit | profit distribution priorities | investment

The selection of optimal dividend policy is one of themain questions in the company’s financial managementstrategy as well as the indicator of investment attractionincrease instruments and financial situation change. Althoughthis subject has been discussed by scientists fromvarious countries for more than 40 years, it has not beensurveyed so far what decisions of company profit distributionare the most rational in respect of both the companyitself and investors. There is no general opinion if itis worth for the company to pursue strategically formeddividend policy and if it is so, then what dividend policyshould be selected by the company seeking its strategicaim – the maximization of the company value and shareholders’benefit. Scientists from numerous countries usuallydeal with effective profit distribution problems inrespect of distinct interest groups. Their works lack asystemic research on dividend policy development subjectto the priorities of profit distribution. Therefore, the researchobject of this article is the formation of dividendpolicy in respect of profit distribution priorities. The aimof the research is to develop a model of company dividendpolicy estimating profit distribution priorities.

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