Abstract:

"Financial policy" is the conduct of the affairs of the company with regard to its structural financial aspects.   It   is   to prepare   and   take   the   necessary   decisions   to   achieve   the   purpose   of   wealth maximization.

Monitoring the interaction between assets and liabilities is a continual process. Indeed, in the interest of continuity of the business, its financing needs and funding must always be in balance.However, each cycle in which the company finds itself requires a specific approach, whether the start-up phase, the growth phase or expansion phase of maturity or decline.

Dividend policy is one of the most important areas in finance literature. Many researchers have studied why firms pay a substantial portion of their earnings as dividends if, according to Miller and Modigliani’s   (1961)   dividend   irrelevance proposition,   dividend   policy   does   not   change shareholders’ wealth. This is known as ‘dividend puzzle’ in finance literature (Black, 1976). One explanation is that dividends help address agency problems between managers and outside investors.The amount of free cash flows, however, depends on the capital requirements of the firm to finance its growth. Generally, firms in a growth stage with abundant investment opportunities tend to have low free cash flows and, in turn, pay lower dividends. On the other hand, firms in a maturity stage with scarce profitable projects to invest tend to have high free cash flows and be able to make high dividend payments. Therefore, the firm’s dividend policy appears to be affected by its life cycle. This is known as the life-cycle theory dividends (see, e.g., DeAngelo et al., 2006; Fama and French, 2001; Grullon et al., 2002). 

The problematic of this research focuses on the following question: How the ownership structure may influence the financial policy during the different phases of life of the company.