Abstracts Dividend policy involves extremely important fi nancial decisions which serve as a basis of numerous theories. However, these theories have been developed in diff erent fi elds, and according to some evidence this policy remains a kind of dilemma in the fi nancial cycles of corporations. Th us we deal with them as one of the ten most crucial problems of corporations. Th e aim of this study is to elaborate a model which would enable us to examine the eff ects of dividends in relation to profi tability, size, beta rate, the rate of retained earning, P/E, and debt ratio. In other words, our aim is to fi nd an answer to this question: Do these above mentioned factors aff ect the dividend policy in Iran or not? Th is research covers all listed companies in the Tehran Stock Exchange between 2000 and 2008. According to the results of the study there is a direct relationship between dividend and profi tability. However, the results also reveal that there is a reverse relationship of these factors with P/E, beta rate and debt ratio. Furthermore, the results of the study show that there is no meaningful relationship between the dividend policy and a company’s size and rate of retained earning.

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