Free Cash Flow Hypothesis, Life-Cycle Theory and Their Relationship with Dividend Policy

The purpose of this research is to examine the relationship between free cash flow، life cycle and dividend policy in companies listed in the Tehran Stock Exchange (TSE) over the period 2002-2009. Using 304 company-year data and conducting OLS regression model showed that there are no significant relationship between dividend policy and free cash flow. These results are not consistent with free cash flow hypothesis and the relationship with dividend policy which is proposed by some prior researchers (Fama and French، 2001; Grullon and et al.، 2002 and Deangelo and et al.، 2006). Also the findings show no significant relationship between companies'' life cycle and their dividend policies.