Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


The Relationship between Behavioral Finance and Dividend Policy: A Literature Review

Author(s): Fakhrul Hasan, Mohammad Raijul Islam

The main objective of this paper is to provide a meaningful aspect of the contemporary issues of dividend policy from the point of behavioral finance perspective. As dividend policy can be considered as one of controversial topics of corporate finance, and thus it is still considered a puzzle for the corporate finance researchers, therefore, they recently endeavor to exploit the behavioral finance perspectives to solve the dividend policy puzzle. The paper gives an overall outline of the dividend policy literature from the behavioral finance perspective. This paper provides a survey of literature. It outlines the dividend policy’s primary theoretical arguments from the behavioral finance perspectives along with behavioral elements and calendar anomalies having effects on dividend policy. With the analysis of the literature, this paper finds no concrete evidence as to why firms pay dividend even though behavioral finance’s literature perspectives have been thoroughly analyzed. The paper showcases an updated and comprehensive literature with the thorough examination of the relationship between behavioral finance and dividend policy.

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