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Dian Purnomo Jati


Dividend policy is one of the financial decisions that must be taken by companies outside the investment and financing decisions. Dividend policy is the decision related to the use of company profits distributed to shareholders or will be saved in the form of retained earnings. If we look at the stock price model with constant growth, the larger dividend payments are likely to increase the stock price will then increase the value of company. However, if the dividend payments increase, it will reduce the internal sources of funds to be used for investment.. It shows that the decision to split the earnings in the form of cash dividends or retained earnings is trade-off. There are many theories that explain the dividend policy and its implications for both the management and investors. This article will discuss the phenomenon of market response to dividend policy. Corporate risk will have an influence on investors in perceiving the information content of dividend policy.
Keywords: dividend policy, corporate risk, market response

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