This thesis examines management's rationale for utilising Dividend Reinvestment Plans (DRPs) and the investor reaction to the introduction of these plans in an Australian context. As such, the study analyses DRPs from both an organisational and investor perspective and provides insight into the relationship between firm specific attributes and DRP decisions. A number of hypotheses are established with regards to the expected characteristics of firms utilising the plans and the factors driving the positive abnormal returns experienced upon the plan's introduction. The results provide strong empirical support that DRP and non-DRP firms differ in terms of characteristics including clientele, size and corporate policy choice. Additional analysis shows that investors react more positively to DRP introductions when the firm has lower leverage and pays out fully franked dividends.