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policy affects firm value. Some researchers believe that dividends increase shareholder wealth (Gordon, 1959), others believe that dividends are irrelevant (Miller and Scholes, 1978), and still others believe that dividends decrease shareholder wealth (Litzenberger and Ramaswamy, 1979). Financial management research on financing policy decisions, including the dividend decision, considers investment as an exogenous variable, or at least as having a fixed, known distribution. However, recent research (Cornell and Shapiro, 1987; Peterson and Benesh, 1983; Prezas, 1988; and Ravid, 1988) suggests that there are interactions between investment and financing decisions. Cornell and Shapiro (1987) posit that non-investor stakeholders (customers, employees, suppliers, distributors, and other firms providing complementary goods and services) influence this interaction of investment and financing decisions. We investigate the influence of these stakeholders on firms' dividend policy by examining the interaction between the dividend and investment policies. We propose that both non-investor stakeholders and capital suppliers have an impact on a firm's dividend
Holder et al. (Thu,) studied this question.