Dividend Policy, Cash Flow, and Investment in TehranStock Exchange

The study aims to know the relationship between dividend policy, cash flow and investment of firms. For this, 100 firms from stock Tehran exchange during 2002-2008 were investigated. In this research the year 2006 is the base year of dividend policy identification. The firms were divided into three kinds: Dividend increase, dividend decrease and no dividend change. The results of Wilcoxon test showed that there is a significant relation between dividend payment policy and cash flow, operating income, leverage ratio, and tangible fixed assets. The Regression test results revealed that the next two years income has not a significant effect on the changes of dividend of the base year, but two previous years income had effect on it. Further, the Regression test results showed that Tobin q ratio, cash flow, dividend, dividend announcement and change in liabilities have a significant effect on level of investment. On the contrary, growth rate and paid-in capital have no significant effect on level of investment. Key words: Dividend Policy; Investment; Cash Flow.