Emerging Economy Studies 1–11 © 2024 International Management Institute Article reuse guidelines: in.sagepub.com/journals-permissions-india DOI: 10.1177/23949015241235036 journals.sagepub.com/home/emi Article Dividend Payout and Firm Value Relationship: Role of Age and Size Navin Chettri 1 , Mekelle J. Kharkongor 1 Abstract This research article examines the relationship between dividend payout (DP) policy and firm value (FV), with a focus on the impact of the age and size of the firm. The study used a panel regression model to analyze the data of 657 companies for seven years with 4,599 firm-year observations, and results indicate that DP positively influences the FV of Indian firms. However, when analyzing the relationship based on age and size, it is found that there is no statistically significant relationship for younger and smaller firms. This supports the maturity hypotheses theory, suggesting that younger and smaller firms need to rely on other strategies to influence market value, while larger and older firms with more resources and experience can positively impact market value through DP. The study highlights the importance of considering age and size effects on the relationship between DP and FV. Keywords Dividend payouts, firm value, age effect theory, size effect theory, maturity hypotheses Introduction Dividend payout (DP) policy has long been a sub- ject of significant interest and debate among aca- demics, practitioners, and investors alike. Understanding the relationship between DP and firm value (FV) is crucial for both financial man- agers and market participants, as it directly influ- ences investment decisions, capital allocation strategies, and overall shareholder wealth. This article aims to provide a comprehensive analysis of the impact of DP on FV, examining the impact of the age and size of the firm and their effect on the relationship between DP and FV. DP represents the portion of a company’s earnings distributed to shareholders in the form of cash dividends. While dividends have been considered a vital component of total shareholder return, their effect on FV is inconclusive. Empirical studies exploring the DP– FV relationship have yielded mixed findings. Some studies suggest a positive relationship, indi- cating that companies with higher DPs tend to have higher FVs. This perspective highlights the attractiveness of dividend-paying stocks to inves- tors seeking current income and stable returns (Baker & Jabbouri, 2016; Baker & Weigand, 2015; 1 Department of Commerce, St. Edmund’s College, North-Eastern Hill University, Shillong, Meghalaya, India Corresponding author: Navin Chettri, Department of Commerce, St. Edmund’s College, North-Eastern Hill University, Shillong, Meghalaya 793022, India. E-mail: navinchettri01@gmail.com