The Harmonius Dance between Payout Policy and Peer Influence

Abstract

Dividends are important for investors because there is a tendency that investors expect large dividend payments as a source of income. Dividends for companies are also important because they can reflect the value of the company. Dividends are generally given annually, if the company makes a profit from production. Peer effect is a condition where companies that pay dividends after other companies pay them earlier will be affected by their dividend policy, in this case the amount of dividends to be distributed may change. This can happen because the company will try to maintain the amount of dividends to show the company's performance, when compared to other companies that have paid dividends earlier.