As a background, it will be well to indicate at the outset the general characteristics (and our method of selecting) the companies whose dividend practices have been intensively studied on an individual basis. After a careful review of both the academic and nonacademic literature
on corporate financial policies and the School's case files, we made up alist of some fifteen readily observable factors and characteristics that appeared to reflect or might be expected to have an important bearing on dividend payments and policy. We then reviewed the available information on over 600 listed, well-established companies and selected 28 for detailed investigation, such that there was a minimum of 3 companies within each major breakdown of each of these characteristics. As illustrations, we included 10 companies whose gross plant and
equipment expenditure in the postwar years through 1953 had been more than 300 per cent of their gross account in 1945, and 5 under 100 per cent; 4 paid out over 70 per cent of their earnings in these years, 12 less than 40 per cent; 6 used no external financing during the
period, while 5 had used these sources for more than 40 per cent of total uses of funds for plant and equipment and working capital increases; and the group was divided almost evenly between durable and nondurable goods industries and also between consumer and producer
goods industries. Other factors included company size, frequency of change in rates, relative average earnings on invested capital, average price-earnings ratios, balance-sheet and fund flow liquidity, stability of earnings, capitalization, use of stock dividends, extras and splits, and
the size and relative importance of stock ownership by management and other control groups. The companies selected were all in the broadly defined "industrial7' area, because of the greater diversity of dividend policy within this sector and the relatively greater knowledge of dividend
policies among other important groups.