1. Introduction

In Lintner’s study (1956), the dividend payment by a company is correlated to its current        earnings. A company will change its dividend pay-out ratio out of target ratio based on the net profits. Besides, other factors such as liquidity, firm sizes, taxes are found that have a              significant influence on the companies’ dividend payment.

Although there are a large number of papers and researches have studied the corporate           finance, especially dividend policy, most of them focus on the North American markets and   some other developing countries markets. And the methodology they used are various,           including quantitative and qualitative methods. Motivated by the features of the FTSE 100,    the major aim of this study is to find out the correlation between the listed known influencing factors and the dividend policy of FTSE 100. By the process of the test in the study, whether  and how much the listed factors influence the dividend policy can be found out. And this        study can contribute to helping investors to choose the most suitable stocks as well as helping the management optimize the dividend policy from the perspective of listed factors.

2. Theoretical Background and Hypotheses development

The base of quantitative approach is statistical data collection and analysis, including    interviews, observations, audio-visual materials and document review. (Creswell 2014). In this study, the listed factors of dividend policy and hypothesises are:

Tax:

H1: tax is a significant factor for dividend policy.

H1*: tax is not a significant factor for dividend policy.

Firm Size:

H2: firm size is a significant factor for dividend policy.

H2*: firm size is not a significant factor for dividend policy.

Liquidity:

H3: liquidity is a significant factor for dividend policy.

H3*: liquidity is not a significant factor for dividend policy.

Profitability:

H4: profitability is a significant factor for dividend policy.

H4*: profitability is not a significant factor for dividend policy.

In this study, the expected results are that these factors all have significant relationship with dividend pay-out ratio.

3. Possible data sources

The data sources of this study is from the listed companies in the FTSE 100 during the period between 2010 and 2019. The data can be found from public online access, such as Yahoo       finance, and available database, such as Capital IQ and FAME.

4. Empirical Analysis

Firstly, I will do some filtering to the raw data, due to some companies do not show the           financial statements during the time period. And then I will calculate the ratios suitable for the model for uniform comparison between different companies. Next, I will build OLS models   to test these factors significance and make conclusion.

5. Applications

Investors and managements of the companies could use the conclusion of this study to make better decision in the future.