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This document summarizes a study on shareholders' perceptions of dividend policy. The study surveyed shareholders of listed companies to understand their views on various aspects of dividend policy, including payment amounts and frequencies. Key findings include that most shareholders invest small amounts, expect dividends to meet expectations, and make investment decisions randomly. The study recommends strategies for companies to encourage more investment, ensure sufficient returns, and keep shareholders informed.
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This document discusses several theories of dividends, including:
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Dividend decisions involve determining what proportion of a firm's equity earnings to pay out to shareholders as dividends, and what proportion to retain for reinvestment. There are two main theories on dividend policy - the relevance theory and the irrelevance theory. The relevance theory posits that dividend decisions impact share prices and firm value, while the irrelevance theory argues that dividend policy does not affect these. The document then discusses various dividend theories and models, types of dividend policies, and factors that influence a firm's dividend policy decisions.
Dividend Decision
This document discusses various aspects of corporate dividend policies, including theories on dividend relevance and irrelevance, factors that influence dividend policies, types of dividends such as stock dividends and stock splits, and methods of stock repurchase. It covers Modigliani-Miller's argument that dividends are irrelevant, counterarguments that dividends do matter due to taxes and signaling, and factors corporations consider in determining their dividend policies such as funding needs, liquidity, and debt restrictions.
Capital Budgeting Decisions
1) Capital budgeting is the process of planning for capital expenditures that are expected to generate returns over multiple years. It involves evaluating potential long-term investment projects and determining which ones to undertake.
2) The document discusses various capital budgeting techniques for evaluating projects, including payback period, accounting rate of return, net present value, and internal rate of return. It also outlines the typical capital budgeting process of identifying, screening, evaluating, approving, implementing, and reviewing projects.
3) Key factors in capital budgeting include properly accounting for the time value of money, risk analysis, and ensuring projects will maximize long-term profitability for the company. Both traditional and modern discounted cash flow methods have advantages and
Dividend policy
This document outlines the key aspects of dividend policy, including:
- The mechanics of declaring and paying cash dividends, including declaration date, record date, ex-dividend date, and payment date.
- Stock dividends involve issuing additional shares to shareholders, while stock splits decrease the share price without changing shareholder wealth.
- The board of directors has discretion over dividend decisions, and shareholders cannot force the board to declare dividends.
Dividend Decisions
The document discusses dividend policy, including the meaning of dividends and different types of dividend policies companies can adopt. It also outlines several factors that influence a company's dividend decisions, such as earnings stability, financing needs, liquidity, and growth opportunities. Finally, it describes different forms of dividends including cash, stock, scrip and property dividends, and their potential merits and demerits.
Dividend policies-financial mgt
The document discusses dividend policy and its various aspects. It defines dividend policy as involving decisions around retaining earnings for reinvestment or distributing earnings to shareholders. The key considerations around dividend policy are a firm's investment opportunities and financial needs, shareholders' expectations, and constraints around paying dividends such as legal restrictions and liquidity. Common dividend policies include paying a constant dividend per share, maintaining a constant payout ratio, or paying a minimum dividend with the option of extra dividends in good years. Stable dividends are generally preferred but come with risks if earnings fluctuate significantly.
Dividend Decisions
This document discusses dividend policies, including the meaning of dividends, types of dividend policies, and factors that influence dividend decisions. It explains that dividends refer to the portion of company profits distributed to shareholders. The dividend policy determines how earnings are divided between payments to shareholders and retained earnings. Key factors that influence dividend decisions include stability of earnings, financing needs, liquidity, growth requirements, and legal obligations. The document also outlines different forms of dividends, including cash, stock, and scrip dividends.
Dividend theories
The document discusses several theories on corporate dividend policies:
1. Dividend relevance theories argue that a firm's dividend policy impacts its value. Walter's and Gordon's models show how value is determined based on factors like earnings, dividends, growth rates, and costs of capital.
2. Dividend irrelevance theories, proposed by Modigliani and Miller, state that a firm's value depends only on its investment policy, not its dividend policy.
3. The bird-in-hand theory suggests that even in situations of equal growth rates and costs of capital, investors prefer dividends in-hand to future capital gains due to uncertainty.
Dividend policy
This document discusses dividend policy and the various theories around it. It defines dividends and discusses Walter's model and Gordon's model, which propose that dividend policy affects firm value. It also covers the irrelevance theories of Modigliani-Miller and the traditional approach, which argue that dividend policy does not impact value. The document provides formulas for the different models and discusses their assumptions and criticisms.
Dividend policy
The document discusses dividend policy and its relationship to a firm's market value. It defines dividend policy as a board's decision on distributing residual earnings to shareholders. Different types of dividends are covered, including cash, stock, and liquidating dividends. The mechanics of declaring and paying cash dividends are explained. Modigliani and Miller's dividend irrelevance theorem and its assumptions are summarized, along with arguments for why dividends may matter in the real world due to factors like taxes, risk, and investor preferences.
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Effect of Dividend Policy on Value Creation for Shareholders of Companies Lis...
Several theories have been documented on the relevance and irrelevance of dividend policy. Many
authors continue to come up with different findings from their studies on the relevance of dividend policy. A
company’s management is dealing with competing interests of various shareholders, the kind of dividend policy
they adopt may have either positive or negative effects on the share prices of the company. The effect of a firm’s
dividend policy on the current price of its shares is a matter of considerable importance, not only to
management, who must set the policy, but also to investors planning portfolios and to economists seeking to
understand and appraise the functioning of the capital market. It is on this basis that the study sought to
establish the effect of dividend policy on value creation for shareholders of companies listed in the Nairobi
Securities Exchange. The objectives of the study were to establish the effect of dividend announcement on value
creation for shareholders of companies listed in Nairobi Securities Exchange, to establish the effect of dividend
payout on value creation for shareholders of companies listed in Nairobi Securities Exchange, to determine how
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to identify how free cash flows influence value creation for shareholders of companies listed in theNairobi
Securities Exchange. A questionnaire was used to collect primary data from the Finance Managers of the public
companies. The data wasanalysed using Regression Analysis, and descriptive statistics through the use of SPSS.
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companies listed in the NSE
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This document provides an introduction and overview of dividend policy and its impact on market price. It discusses different types of dividends and dividend policies. It summarizes two key models - the Walter model and Gordon model - that show the relationship between dividends, earnings, growth rate, and market price. The document also discusses the scope of the report, which is to study the annual reports of different power sector companies in India, including NTPC Limited, NHPC, TATA Power, Power Grid Corporation of India Limited, and Torrent, to analyze their dividend policies and the impact on their market prices.
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Strategic financial management combines accounting and financial management to help achieve organizational objectives through strategic decisions around financing, investments, dividends and portfolios. It is important for long-term survival and market leadership. Financial policy and strategic management are closely linked, as strategic decisions require financial considerations and financial policies shape organizational strategy and growth. Sustainable growth requires balancing financial goals with distributing resources in a way that benefits future stakeholders.
Ijirsm ranpreet-kaur-the-study-of-dividend policy-a-review-of-irrelevance-theory
Ijirsm ranpreet-kaur-the-study-of-dividend policy-a-review-of-irrelevance-theoryIJIR JOURNALS IJIRUSA
Dividend policy is said to be one of the crucial decision
in corporate finance management from past decades as
decision of dividend is linked with the financial
management objective of wealth maximization and profit
maximization it is always crucial decision. Which should
be given preference wealth maximization or optimum
capital structure? Wealth maximization is said to be
financial management practice which focus on increasing
the net worth of a company or firm so that return for
shareholders can be maximize. No universal consent has
yet come out after several decades of study. There are
theories and studies which have contributed to decide
amount of dividend. Some theories says that there is
relation between dividend decision and value of
firm(relevance theory) and some says there is no such
association(irrelevance theory).There are conflicting
viewpoint as far as the impact of dividend decision on the
value of the firm is considered. The objectives of this
research are firstly, to define the concept and scope of
dividend policy and secondly, to study the irrelevance
theory/ (Modigliani-Miller Model) of dividend policy and
relation between dividend policy approach and market
share prices. Secondary data has been taken for
research. The CNX Dividend Opportunities Index is
considered as Universe. The study is sourced by critical
and creative analysis (literature review) of research
papers and Case Study Method. There are not significant
fluctuations in share prices after declaration of dividend.
Sometimes these fluctuations are associated but not
positive always and there are other factors which
influence share prices. It will facilitate the organizations
to identify with the behavioral aspect of shareholders
which they can use to add value which move towards the
way to wealth maximization as well as profit
maximization.This article is about analysis of if corporate change their divide.docx
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Dissertation
- 1. Dividend Policy: A Study on the perception of Shareholders Department of Business Administration Faculty of Business Studies Prepared by : Jakiya Sultana ID No.: R-152429 Program: RMBA Semester: Spring 2016 Major in Finance and Banking
- 2. To know the perception of shareholders regarding dividend policy followed by the listed companies. Specific Objectives Main Objective To have idea about dividend policies that are followed by different institutions To examine the perception of shareholders regarding dividend policy To find out major problems related to dividend policy & recommend some suggestions to overcome those problems
- 3. Data Collection Data & Analysis Finalizing Collected data have been analyzed by using Collected data have been presented through Percentage Method Pie Chart Primary Data Questionnaire Survey
- 4. Literature Review Dividend payout boosts Shareholders’ value Dilawer, 2012; Kaleem & Salahuddin, 2006; Nitta, 2006 Suggested researchers to develop or modify new theories Compbell & Shiller (1988) Dividend policy have strong impact on shareholder’s value Lang & Litzenberger (1989) Firm should try to conform dividend policy in order to reach a point of agreement to the shareholders Miller & Modigliani (1961)
- 5. Dividend Policy involves three issues Theoretical Framework What fraction of earnings should be distributed? Should the distribution be in the form of cash dividends or stock repurchases? What type of dividend policy should the firm follow? Theories of Dividend Policy The Residual Theory of Dividend Policy Dividend Irrelevancy Theory The Bird-in-the Hand Theory The Tax Differential Theory Agency Cost Theory
- 7. Fulfillment of expectation regarding Dividend payment 23.33% 6.67% 70% Yes Always No Sometimes
- 8. Basis for Shareholders’ making investment decision 6.67% 23.33% 30% 40% Information that are provided by the companies Doing market analysis Both Randomly
- 10. Shareholders’ opinion regarding Company’s Expansion Yes 46.67% No 53.33% Shareholders' opinion
- 11. High dividend payment for company’s performance 43% 34% 23% SHREHOLDERS' BELIEF Yes No Neutral
- 12. 25-35 aged grouped people are highly attracted by stock market investment. Majority shareholders are investing tk. less than 1,00,000 in the stock market. Majority shareholders are motivated in stock market investment to get benefited through frequent buying & selling. Majority shareholders have no problem whether they get cash or stock dividend. Maximum companies very often provide dividend that meet up shareholders’ expectation. to be continued…
- 13. Majority shareholders are making their investment decision randomly. Shareholders demand more returns with low risk. So they are highly attracted to that share which provided moderate risk moderate return. To majority of the shareholders income from share market are not sufficient enough to meet the living expenses. Majority shareholders are not influenced by high dividend policy. Majority shareholders reacted negatively that a high dividend policy can prevent a company from ensuring future expansion. Maximum shareholders holds positive belief regarding high dividend payment is a signal that the company is performing well.
- 14. Strategies must be employed to encourage young and educated persons to invest in share market. Companies have to undertake motivating initiatives to grab more shareholders. Shareholders satisfaction is most important. So it should be done by providing safety, return and liquidity for their investments. Shareholders should make their investment decision through market analysis. Keeping shareholders’ informed about company’s changes is to help motivate them to contribute to future rounds of financing. Listed Companies of the stock market should ensure people that income from share will sufficient enough to meet their living expenses. The degree of awareness and knowledge about dividend policy has enabled the shareholders to make meaningful investment decisions.
- 15. The aim of this paper was to introduce the Dividend Policy on the perspective of Shareholders. The findings do not indicate what a firm should do about dividend policy; they do indicate how Shareholders actually perceive various factors and issues influencing their dividend policy decisions. The study concludes that if the listed companies of CSE follow the recommendations and try to overcome the shortcomings more investors will invest in stock market.