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1. The dividend policy of a company determines how much of the earnings a company shares with its shareholders in the form of a dividend payment on a regular basis. Each company has its own dividend policy and it can vary significantly from one case to the next. Companies look at several factors when determining their dividend policy.

2. The following things are taken into account for determining the policy:

-Company Priorities

When determining the dividend policy, a company looks at its own mission statement and objectives to determine how much will be shared with stockholders.

-Growth

Different companies value growth in different ways. New companies that are on the verge of expanding typically require more money than those that have been in business for many years. When a company needs to expand and grow, it will require more of its own money for this purpose. If a company has already expanded significantly, it may not need to retain as much of its earnings. The money can then be distributed to the shareholders of the company.

-Volatility of Company Earnings

Another factor that can play into the dividend policy is the amount of volatility involved in the company's earnings. Companies that have a large amount of volatility are less likely to pay regular dividends than those that are stable.

-Governmental Restrictions and Taxes

Companies can also be influenced by government policies and tax laws

3. For details, please reads:

http://www.ehow.com/info_8437788_determinants-divi...

4. Please also read:

http://onlinelibrary.wiley.com/doi/10.1002/rbf.14/...

http://www.ehow.com/info_7783670_factors-affect-di...

http://pdfcast.org/pdf/determinants-of-dividend-pa...

http://www.ehow.com/info_12019957_factors-affect-d...

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