ipl-logo

Dividend Literature Review

1045 Words5 Pages

LITERATURE REVIEW

Jensen (1986), studies on the determinants of dividend policy imply that firms with high profitability and low growth opportunity pay a higher dividend. Also note the agency problem related with dividend payout policy. Insiders have an incentive to divert the firm’s resources for their own benefit.
Vinay T. Datar, Narayan Y. Naik and Robert Radcliffe (1998), provided an alternative study of Amihud and Mendelson’s 1986 model. The only difference was that they used turnover rate i.e. number of shares traded as a fraction of shares outstanding, for measuring the liquidity. The study showed that liquidity has a significant effect on dividends payout while controlling for other factors such as size of the firm, its beta and book-to-market …show more content…

and Head A. (2007), mentioned in their book, “Corporate Finance; principles & practice” that as dividends and tax liabilities are the transactions in cash so mangers should cautiously look at the effect of liquidity position of the company on the dividends. Dividends do depend on the profits but the profits are not the same as the availability of the cash to the company, so for that the dividends must reflect the liquidity of the company along with the profitability.
Baker (2011), believed that dividend payout policy refers to the size and pattern of cash distributions to shareholders over time. The word policy implies that these distributions are stable and predictable. There has been extensive research on developing a standard explanation of the policy but the objective has not been achieved.
Anupam Mehta (2012), carried out a research in order to chalk out the important determinants of dividend policy for the firms listed in Abu Dhabi Stock Exchange, UAE, for a period of 5 years from 2004-2009. The sectors for the involved energy, real estate, telecommunication, manufacturing, health care, construction except bank and investment sector. The study concluded that firm size and risk are the significant factors that determine the dividend policy. However other factors such as profitability, leverage and liquidity do not significantly affect the firm’s dividend decisions.
Bogna (2015), finds profitability as a negative function of dividend payout

Show More
Related

  • Home Depot Financial Analysis Essay

    1214 Words  | 5 Pages

    The Home Depot has paid a dividend each quarter since the 1990’s, raising dividends on every fourth occasion. They even continued to roll out dividends during the financial crisis in 2008 and 2009. For a company so dependent on the housing market this is extremely impressive, and speaks volumes about financial strength. Management currently promises on returning 50% of earning each year through quarterly dividends. They are also committed to reducing share count.

    Read More

  • Summary Of The First Day By Edward P Jones

    136 Words  | 1 Pages

    From new and upcoming author, Edward P. Jones, comes his first short story The First Day. This story recounts the tale of a five-year-old girl and her illiterate mother who face the task of enrolling the young infant in elementary school. Despite her efforts, her mother’s lack of knowledge and poor financial state, hold back her daughter from attending her ideal school. Nevertheless, the young girl eventually finds an elementary school where she will attend.

    Read More

  • Loblaw Company You Have Assessed Their Financial Statement

    168 Words  | 1 Pages

    The company that I have chosen to asses is Loblaw Companies Ltd. I have assessed their financial statement as at June 20th, 2015 and June 14th, 2014, and decided to proceed for future investment in this company with my $10 000. The reasons that I have decided to invest in this company is because, first, they are closing down 52 retail locations that are unprofitable. This will allow them to be less in debts and repay their loans faster. Second, their revenue income has increased since the second quarter of 2014 by $228 million; from $10,307 to $10,535.

    Read More

  • Holy The Firm Analysis

    906 Words  | 4 Pages

    Speaker The speaker is Annie Dillard, who is also the author of the book. In Holy the Firm, the author expresses her thoughts in regard to questions such as the reason that humans are created by God; the meaning and essence of God’s work; and the relationship between the believers and God. Dillard encounters great conflicts in her belief in God when she saw that a girl in her neighbour’s farm was burned by a plane crash. She starts to question whether every act of God has any real meaning in it and if it does, why would God let a innocent girl be burned by excruciating fire at such a young age when she has done nothing wrong. She even wonders if God is just a powerless creator who has no power to save those who suffer from atrocities.

    Read More

  • Tesco's Horsemeat Scandal Analysis

    778 Words  | 4 Pages

    This chapter is a detailed summary of Tesco’s horsemeat scandal and explains about possible adverse catastrophic effects apart from its risk structures , Establishing an business and maintaining its reputation is a biggest challenge for any organization, but all of their hard work may also can come to the end due to any single killer mistakes, the ethic for the largest retailer has more than 90 years of history also evident that there is no difference in paying penalty when comes to mistakes, Where in 2013 Tesco brands handicapped when Irish food inspectors announced that they found frozen beef burgers containing horsemeat of leading companies. Shortly Selten; Supplier of many leading grocery chains including Tesco, was ordered to recall fifty thousand(50,000) tones of its meat sold as its horse smuggling and abuses proved. subsequently when Tesco’s beef burgers tested positive in DNA test and found its beef burgers contained twenty nine (29) percentage of horse meat (The Guardian, 2013), however further complications started when it was found that Tesco’s Everyday Value Spaghetti Bolognese pack also contained sixty (60) percentage horse meat (BBC, 2013) then in response to the controversy Tesco recalled its 26 product lines, which emerged as one of the biggest food fraud in Britain and caused three hundred million dollar loss for Tesco

    Read More

  • Autozon Case

    713 Words  | 3 Pages

    On February 1, 2012, portfolio manager, Mark Johnson, a portfolio Manager of Johnson & Associates, was reviewing his holdings for AutoZone, an auto part retailer store of aftermarket automotive parts and accessories in the United States. The auto retailer sales were split into two segments: Do-It-Yourself (DIY) and Do-It-For-ME (DIFM). AutoZone has performed well in maintaining stable stock prices and high return on invested capital. According to exhibit 1 in the book states, 11.5% of average annual return and a stock price of $348 since 1997, however; a noticeable shareholder, Edward Lampert, began liquidating his shares in the company. It’s an issue that can lead to questing among shareholders and potential investors.

    Read More

  • The First Day Edward P Jones Analysis

    660 Words  | 3 Pages

    “The First Day” by Edward P. Jones is a short story written in 1992. The short story is about an African American mother taking her young daughter to school for the first time. The daughter becomes ashamed of her mother because she sees where her education level is at. The mother is also ashamed of herself because she didn’t get education throughout her life. In “The First Day” the opening scene sets the tone for challenging the status quo and creating a life of success.

    Read More

  • Ryanair Financial Ratio Analysis

    2985 Words  | 12 Pages

    The above figures show that Ryanair as a company is far more liquid than BA. Ryanair was considerably higher than BA due to its small amount of liability, thereby meaning a low obligation to lenders. Indeed, this may reflect good liquidity in terms of liability management. However, the excessively high ratio as shown by Ryanair in 2012 at ratio of 2.14 (which conversely, BA was at their lowest), may also imply that the company possess too much of a certain type of asset, rather than maximizing its profitability through diversification. Regretfully, the result cannot be fully identified with current or acid ratio, and further analysis in the asset management or other liquid ratios is

    Read More

  • History Of Diageo Plc

    1421 Words  | 6 Pages

    Decisions pertaining the Directors remuneration are taken by the Remuneration Committee. A study by Solomon and Solomon (2004) declares that the need for an independent remuneration committee has been highlighted in the academic literature as a mechanism to prevent executives writing and signing their own pay

    Read More

  • Gemini Electronics: Financial Analysis

    1341 Words  | 6 Pages

    Gemini Electronics has become a successful electronics company that looks to be growing on an upward slope. We can see where Gemini is booming, as well as where they are lacking, by analyzing their Ratios and Statement of Cash Flow. Liquidity measures a firm’s ability to meet its cash obligations; shown by calculating the Current Ratio and the Quick Ratio. Gemini’s liquidity has slightly increased from 2008 to 2009, but remains below the industry average. An acceptable Current Ratio should be around 2:1, which Gemini has exceeded in 2008 (2.52:1) and 2009 (2.56:1).

    Read More

  • Shareholder Wealth Case Study

    1954 Words  | 8 Pages

    Mergers and Acquisitions and Shareholder Wealth: The theory of finance states that maximization of shareholder wealth should be the goal of every business organization. It is not clear, however, whether maximization of shareholder wealth is the main motivation behind Mergers and acquisitions. This has generated a lot of research interest the area. Unfortunately decades of intensive research have not been able to conclusively establish the impact of Mergers and acquisitions on shareholder wealth.

    Read More

  • Stakeholder Analysis: Lockheed Martin Corporation

    1461 Words  | 6 Pages

    In a competitive world market, businesses must have a thorough understanding of the processes and systems used within the company in order to determine whose interests need to be taken into account when implementing policies and/or programs. This stakeholder analysis is integral to growth and development. For large corporations which have multiple divisions and companies within their corporate structure it is essential to look at all aspects of the business model to identify stakeholders. Establishing the given responsibilities of the various divisions and the direct role they play in the economic success of the firm must also be considered. Many of the largest and most lucrative corporations in the world are those related to supporting military

    Read More

  • Bark & Co.: Company Analysis

    879 Words  | 4 Pages

    Bark & Co. is a company founded by Matt Meeker, Henrik Werdelin and Carly Strife. The company owns several products – the initial and probably best known is ‘BarkBox’. Due to BarkBox’s success, the company Bark & Co. was created, which dedicates to build products that promote health and happiness of dogs everywhere (BarkShop, 2014). It was launched in December 2011 and had reached $25M in revenue by June 2013 with 100,000 subscribers (Fueled, 2013). Like illustrated in Figure 2, Bark & Co. has different businesses: ‘BarkPost’ is a dog content website that has the capability of receiving over 400,000 visitors monthly, ‘BarkCare’ is a dog health mobile application that can be reached 24 hours 7 days a week for vet consultation service (D’Onfro,

    Read More

  • Analysis Of Financial Analysis: Whitbread PLC

    3531 Words  | 15 Pages

    This, joined with its great cash-flow, has driven the board to suggest an entire year profit increment of 19.9%. This amplifies its reputation of double digit development, with sales growing by 11.4% in the course of the most recent five years and EPS and dividend per share becoming by 14.7% and 13.5% respectively. (Whitbread Investors,

    Read More

  • Swot Analysis Of Grace Kennedy

    904 Words  | 4 Pages

    Exposure to credit risk is managed in part by obtaining collateral and corporate and personal guarantees. Counterparty limits are established by the use of a credit classification system, which assigns each counterparty a risk rating. Risk ratings are subject to regular revision. Liquidity Risk Liquidity risk is the risk that the company is unable to meet its payment obligations associated with its financial liabilities when they hall due and to replace funds when they are withdrawn. GK’s liquidity management process, as carried out within the Group through the ALCOs and treasury departments includes: o Monitoring future cash flows and liquidity on a daily basis o Maintaining a portfolio of highly marketable and diverse assets that can easily be liquidated as protection against any unforeseen interruption to cash flow o Maintaining committed lines of credit Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

    Read More

More about Dividend Literature Review

Open Document