The Relationship Dividend policy and Investment Efficiency with Emphasis on Firm Life Cycle

The dividend payments are more important because of the increased conflict of interests between managers and investors. As the increase in interest conflict and agency problems results in over investment and under investment, and given that the degree of interest conflicts and agency problems varies throughout the life cycle of the company. In hence, the aim of present study is investigation of relationship between dividend policy and investment efficiency with emphasis on the life cycle stages. To measure the investment efficiency, the model Biddle et al (2009) and as well as for division of corporate life cycle stages, Dickinson pattern (2011) was used. Thus 110 listed companies on Tehran Stock Exchange for the period 2010-2015 was selected. For this purpose, the panel data model is used by statistical software Eviews. The results showed that there is a positive significant relationship between dividend policy and investment efficiency. Also dividend payment had been reduced over and under investment. Also, dividend paid result in decrease over investment and under investment. On the other hand, companies are examined in three stages of growth, maturity and decline. The results showed that dividend is improved investment efficiency in stages of growth and maturity, whereas dividend payments has not relationship with investment efficiency in decline stage.