'The harder we look at the dividend picture, the more it seems like a
puzzle, with pieces that just don't fit together' (Black 1976, p. 5). A
number of researchers provide insights, theoretical as well as
empirical, into the dividend policy puzzle. The issue as to why firms
pay dividends is as yet unresolved. There is no unanimity among
researchers but everyone agrees that the issue is important, as dividend
payment is one of the most commonly observed phenomenon in corporations
world-wide. The empirical results identify leverage, size, insider
ownership, and collateralizable assets as the major determinants of
dividend policy. The empirical results document that dividend decision
is primarily governed by cash flow for measuring the capacity of the
companies to pay dividends and dividends paid in the previous years. The
empirical results also identify Brittain's (1966) partial adjusted model
as the best-fit dividend behavioural model. As insiders trade in the
market, information used to be adjusted with the share prices before
announcement, therefore, dividend announcement does not convey any new
information to the emerging market.