To Present the Optimal Dividend Model (Evidences from Tehran Stock Exchange Listed Companies)

By decision making on the amount of cash dividend which is distributed among stockholders, retained earnings for extra investment and dividend yield for investors is determined. So, optimal dividend is an important issue for decision makers (in Iran, Annual General Meeting (AGM)).The main objective of this paper is to present a model, to find optimal dividend in which operational level of activities would be stable without any failure. Model is based on free cash flow and investment plan of the company. In this study, also the current situation of 433 Tehran Stock Exchange (TSE) listed companies for the period of 2004 to 2008 is investigated. Data structure is in the form of unbalanced panel data with 1987 observation. The results show a significant difference between optimal dividend and approved dividend in AGM in TSE. Approved dividend in AGM is 3 times greater than optimal dividend. Also, no relationship between approved dividend in AGM and optimal dividend is approved and no relationship between approved dividend in AGM and net increase (decrease) in cash is approved. But, relationship between approved dividend in AGM and operating cash flow and last year dividend is approved.