This article presents an empirical study about a possible interrelation between dividend and investment policies practiced by Brazilian companies listed on the São Paulo Stock Exchange (BOVESPA). The objective was to identify if the Brazilian companies modify their dividend policy in view of the need for permanent investments. The theoretical framework of this research is particularly based on the 1961 classic proposals by Miller and Modigliani. The empirical study was realized through multiple regression analysis, applied to a sample of 476 pooled data for the period from 1998 to 2002. The sample was studied, contemplating all data, and was divided in quartiles, according to company size and volume of loans in the period. The main evidence shows that there is no relation between these policies. As the Brazilian market cannot be considered perfect, this evidence reveals that possible imperfection in other markets are not efficient justifications to explain evidences about a relation between dividend and investment policies. Other factors influenced the empirical results. In the Brazilian case, the regulation of dividend politics cannot be ignored in this type of analysis.
Dividends; Investments; Legal Protection
