CHAPTER 1INTRODUCTION1.1 BACKGROUND OF THE STUDYDividend policy is one of the most crucial and controversial issues in corporate finance and it still retains a place of choice in developed and emerging markets. In 2005, Brealey and Myers described this dividend policy as one of the ten most difficult unsolved problems in financial economics. This description is consistent with a famous extract from Black (1976) who stated that "the more closely we look at the dividend table, the more it resembles a puzzle whose pieces do not fit together." Many studies show that there are many factors that affect the dividend payout rate by various industries in different countries. Although many studies have been conducted, the results show that there are differences between sectors when it comes to the factors that impact dividend payouts. According to Amidu and Abor (2006), the dividend payout ratio of companies listed on the Ghana Stock Exchange has a significant relationship. in terms of profitability, cash flow, sales growth, taxation and market value. However, in the end, the result shows that there is a positive relationship between dividend payout ratio and profitability, cash flow and taxes in the Ghana Stock Exchange. Despite this, in 2008, Anil and Kapoor, in their conclusions, already attempted to analyze empirically. the determinants of dividend payout ratio of Indian information technology sector over a period of six years. They found that cash flow, corporate tax, sales growth and market value to book value ratio do not explain dividend policy in the IT sector. But only liquidity is found to be significant and positive relationship between dividend payout ratio and Indian information technology...... middle of paper...... will be obtained from various database websites. Moreover, the data used in this study only relates to the year 2002 to 2013 in the annual reports of the Employees' Provident Fund. The result of the study will not be exactly accurate in determining the factors that influence the dividend payout ratios in employee provident fund. 1.8 SUMMARY OF THE STUDY This chapter covered the introduction and background of the study and explains the objective of this study. Understand the issues and problems in the problem statement. Research the study and answer research questions related to the study. Based on the research question, develop the research hypothesis and theoretical framework that includes the independent variable and the dependent variable. Which is also designed in the only section of this chapter. Determining the significance of the study and resulting in limitation of the study.