Abstract
The Corporate Dividend policy, also called the Dividend Puzzle (Black, 1976) has always beensubjected to a lot of studies since, at least, the paper of Modigliani and Miller in 1961. The work ofthese authors stated that, in a frictionless world, when the firm has a constant investment policy,its dividend payout policy will have no consequences on the wealth of the shareholder. Indeed, theirreasoning is that higher dividend payments lead to lower retained earnings and capital gains, andinversely, leaving the total wealth of the shareholders unchanged. But, as we can see in thenewspapers, corporations are following highly deliberate dividend payout policies. This is thusraises a question: How are firms choosing their dividend policies?
In order to answer to this question, we will first briefly study the history on the determinantsof the Corporate Dividend Policy and then conduct an investigation on this topic by analyzing twoparticular sectors of the London Stock Exchange: ‘Health care equipment and services' and‘Food and drugs retailers'.
