Dividend policy and the stability of dividend payments evaluation on a sample compant which registered İstanbul Stock Exchange

VI ABSTRACT The purpose of this thesis was to find out the stability of dividend payments which is important for company's dividend policy. The stability of dividends mean maintaining the position the firm's dividend payments in relation to a trend line, preferably one that is upward sloping. Dividend changes are often driven by signaling and smoothing motives. Investors may well place a positive utility on dividend stability and pay a premium for the company that offers it. Fama and Babiak found a model for explaining dividend behavior. In accordance of this model the changes of dividend depends on current earning, past earning and past dividend payments. Dividend changes often lag behind changes in earnings. Fama ve Babiak' s dividend changing model was tested on a sample company which registered Istanbul Stock Exchange (ISE). The research was done on sample of companies which is registered ISE considering the term of 1986-1999. The result of this study is; past earnings have no effect on dividend change, current earnings and past dividend payments have negative effect on dividend changes.