The Effect of Dividend Policy on Investment Decisions of Individual Investors

This study aims to determine the effect of dividend policy on investment decisions of a sample of individual investors settled at Western Mediterranean Region (Antalya, Burdur and Isparta) in Turkey. The survey method was employed within the study. Initially, the demographic features of the individual investors investing in stocks were examined. Then, the effect of firms' dividend policies on individuals' decisions on investing in stocks were elaborated. The findings of the study revealed that the men and married people prefer to invest in stocks more than women and singles, self-employed and retired people perceive stocks as an investment instrument, people who are at 26 to 49 years old invest in stocks more than the other age groups, and there is a positive ratio between the educational background, income and investing in stocks. Earnings per share, dividend policies in the previous years, whether they provide dividend, forms of dividend payment and dividend policies of the firms is to create a statistically significant difference on investment decisions. Another critical outcome of the study is that investors prefer gradually increasing dividend share policies comparing to other dividend policies. Besides, the results show that it is very important for investors that firms should both present the reports on their financial situations and determine dividend policy by taking long term policy and strategies into account