DIVIDEND POLICY DECISIONS: THEORETICAL VIEWS AND RELEVANT ISSUES (original) (raw)
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The Impact of Dividend Policy on Shareholders' Wealth
The present paper is aimed at analyzing the impact of dividend policy of shareholders' wealth in Organic and Inorganic Chemical Companies in India during 1996 – 1997 to 2005-2006. To measure the impact of dividend policy on shareholders' wealth multiple regression method and stepwise regression models are used by taking DPS it (Dividend per Share), RE it (Retained Earnings per Share), Pe t-1 (Lagged Price Earning Ratio) and MPSi t-1 (Lagged Market Price) (MVi t-1) as independent variable, and MPS it (Market Price Per Share) as dependent variables. To determine the proportion of explained variation in the dependent variable, the coefficient of determination (R 2) has been tested with the help of F value. The study proves that the wealth of the shareholders is greatly influenced mainly by five variables viz., Growth in sales, Improvement of Profit Margin, Capital Investment Decisions (both working capital and fixed capital), Capital Structure Decisions, Cost of Capital (Dividend on Equity, Interest on Debt) etc. There is a significant impact of dividend policy on shareholders' wealth in Organic Chemical Companies while the shareholders' wealth is not influenced by dividend payout as far as Inorganic Chemical Companies are concerned.
The Relationship between Dividend Policy and Shareholder's Wealth
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The article examined the influence of dividend policy on shareholder's wealth of 75 companies listed in “Karachi Stock Exchange”, for duration of six years from 2005 to 2010 using multiple regression and stepwise regression. We have used shareholder's wealth ...
Impact of Dividend Policy on Shareholder Wealth
IOSR Journal of Business and Management, 2014
The present paper is aimed at analyzing the impact of dividend policy on shareholder wealth of oil and gas exploration companies of Pakistan during the years from 1999 to 2006. Statistical tools are used in this research including regression and correlation methods to ascertain best fitted model for predicting the dividend policy impact on shareholders wealth, by taking dividend payout ratio, P/E ratio and BV/MV equity ratio as independent variables and holding period yield as dependent variable. To determine the proportion of explained variation in dependent variable, the coefficient of determination has been tested with the help of Ftest. The result indicates based on historical data and statistical analysis that correlation between independent variables and depended variable is very low for all companies showing insignificant relationship between them.
International Journal of Economics, Commerce and Management DIVIDEND POLICY AND TAXATION: A REVIEW
For decades, the company's dividend policy has been the subject of intense researches. These researches tried to establish on one side a link between the dividend policy and other factors. From other sides, these studies also aimed to study the interaction between these factors. Such as, the existing link between the dividend policy and taxation. This article presents a literature review of recent and old researches concerning the dividend policy. It studies and analyses the contributions of the diverse currents of thought. Indeed, this paper provides a summary of the work of authors who contribute to the hypothesis of the clientele effect. Résumé Depuis des décennies, la politique de dividendes de l'entreprise a fait l'objet d'intenses recherches. Ces recherches tentent d'établir un lien entre la politique de dividendes et d'autres facteurs et la manière dont ces facteurs interagissent. Par exemple, le lien entre la politique de distribution de dividende et ...
Dividend Policy and Its Impact on Firm Value: A Review of Theories and Empirical Evidence
The Empirical and theoretical research on dividend policy has produced an extensive volume of literature.The research are categorized into two different schools of thought, the first is that dividend policy of a firm has an impact on its value and the second is that dividend policy of the firm has no impact on firm value. Even after several years of research no consensus has emerged, and scholars do not even agree upon with the same empirical evidence. This study provides with a complete understanding of dividends and dividend policy by reviewing the theories and their explanations of dividend policy including both dividend relevance and irrelevance theory of Miller and Modigliani, tax-preference,bird-in-the-hand, clientele effects, signaling and agency costs hypotheses. This study also attempts to present the important empirical studies on corporate dividend policy. However, due to the continuing nature and extensive array of the debate about dividend policy which has hatched a vast amount of literature that grows by the day, a full-fledged review of all debates is not feasible.
DIVIDEND POLICY AND ITS IMPACT ON SHAREHOLDERS' WEALTH: CASE OF NON-FINANCIAL FIRMS
The research is about the effect of dividend policy on shareholders' wealth for Dar es Salaam Stock Exchange listed non-financial firms in Tanzania from 2005 to 2019. Design/methodology: The research employs secondary data information from firms' financial reports as published on the Dar es Salaam Stock Exchange website, using descriptive statistics, panel dynamic least square method, and cointegration analysis to test the association between variables. Findings: The results show that at 95 percent level of significance, dividend per share have significant positive effects on all proxies for shareholders' wealth. However, dividend yield has insignificant negative effects on all proxies for shareholders' wealth. The moderating variable indicates that investment opportunities have positive and significant effects on all the shareholders' wealth proxies, which is one of the factors that strengthen the relationship between dividend policy and shareholders' wealth. Originality/value: This result, being the first study done in Tanzania, apart from helping stakeholders to avoid generalization of findings from developed economies to developing countries, will also help firms' managers on how to implement shareholders' wealth-maximizing strategies and capital accumulation for their internal growth. Furthermore, the results will enable potential investors and shareholders to decide whether to invest in certain firms or not, and whether to sell their shares and leave or retain them.
Theoretical Models of Dividend Policy
Economic Alternatives, 2016
Why do modern corporations pay dividends and how does dividend policy affect company’s performance remain controversial theoretical questions in both developed and emerging markets. This paper aims to describe concepts and empirical evidence about three of the most widely discussed theories: namely the theory of the dividend payment preference, the theory of irrelevance, and the theory of tax benefits from profit reinvestment. This is a preliminary stage of a study of the dividend policy of publicly traded companies in Bulgaria. By using these theories the future research of data will be based on the achievements of world science and the applied models will be comparable with the results obtained in other countries.
The main purpose of this research paper is to find whether there is a relationship between the dividend policy and stock price. The dividend policy is a wide topic that requires a lot of extensive research and time in order to analyze everything because there are many several different theories, claims, concerns and suggestions regarding the dividend policy and its impact in the stock prices. However, this research will mainly focus in the most three prominent theories know as Bird-in-hands, Irrelevance of dividend policy and Relevance of dividend policy theory. In addition, the literature analysis will reveal how managers control their firm’s stock price value.
Dividend Policy: A Review of Theories and Empirical Evidence
The literature on dividend policy has produced a large body of theoretical and empirical research, especially following the publication of the dividend irrelevance hypothesis of Miller and Modigliani (1961). No general consensus has yet emerged after several decades of investigation, and scholars can often disagree even about the same empirical evidence. This paper aims at providing the reader with a comprehensive understanding of dividends and dividend policy by reviewing the main theories and explanations of dividend policy including dividend irrelevance hypothesis of Miller and Modigliani, bird-in-the-hand, tax-preference, clientele effects, signalling, and agency costs hypotheses. The paper also attempts to present the main empirical studies on corporate dividend policy. However, due to the enduring nature and extensive range of the debate about dividend policy which has spawned a vast amount of literature that grows by the day, a full review of all debates is not feasible. The paper reaches at a conclusion that the famous statement of Fisher Black about dividend policy "the harder we look at the dividends picture, the more it seems like a puzzle, with pieces that just do not fit together" (Black, 1976, p. 5) is still valid.