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Modeling the dividend policy metrics: The unbiased approach

Vol. 15, Iss. 12, DECEMBER 2019

Received: 21 May 2019

Received in revised form: 15 June 2019

Accepted: 9 July 2019

Available online: 13 December 2019


JEL Classification: G32, G34, G35

Pages: 2242–2258

Krylov S.I. Ural State Federal University named after the First President of Russia B.N. Yeltsin, Yekaterinburg, Russian Federation

Subject In the current circumstances, the dividend policy should accommodate for interests of all stakeholders of the company so as to ensure its long-term sustainable development. Thus, the unbiased approach to the dividend policy is rather an important subject to study.
Objectives The study evaluates whether it is possible to use formalized models of the dividend policy metrics and respective derivative indicators of market activities (situation in the securities market) the company conducts using the unbiased approach to its dividend policy as a means of analyzing and forecasting the above indicators.
Methods The methodological framework includes the dividend irrelevance theory, theory of dividend policy materiality and corporate sustainable development concept.
Results Formalizing the concept of the unbiased approach to the dividend policy, the company should build corresponding models of dividend policy metrics and market activities of the company, such as the dividend yield ratio, dividend coverage ratio, expected price of ordinary share, dividend earnings per ordinary share and price-to-earnings ratio per ordinary share.
Conclusions and Relevance The formalized models of key dividend policy metrics and derivative indicators of market activities constitute an effective tool for analyzing and forecasting them, ensuring reasoned decision-making to manage the corporate dividend policy through the unbiased approach. The formalized models of the above indicators can be used to make projected and analytical estimates and identify why they deviate. For this, we assess how determinant factors inherent in the models influence the indicators, conduct the factor analysis through the unbiased approach to the dividend policy of the company.

Keywords: dividend policy, unbiased approach, analysis, management modeling, company


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