Abstract
In a competitive market, corporate survival depends on the ability to change in accordance with the needs of both internal and external corporate environment. Generally, variations in stock prices can be largely explained by changes in the cash flow of companies and the dividend constitutes the cash flows that accrue to stock holders. Dividend policy determines the decision of earning between payment to stockholders and reinvestment in the firm. But dividend decisions during a period are taken on the basis of both current and past earnings. Therefore, the attempt made here is to justify that the Lintner's model of dividend behaviour seems suitable enough to Indian data and also to analyse the current dividend that depends on current as well as past earnings.
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