Impact Of Dividend Policy On Firm Valuation: An Essay.

For this assignment, due at the end of week 6,  you will be asked to use the feedback from step 1 to prepare a proposal detailing your proposed project. The proposal is to be written in professional report format and contains the following:

• a short, preliminary literature review that places your project within the context of your profession;
• a focused research aim, and at least one research question; and
• a research plan, including: an overview of your proposed methods of data collection and data analysis; Gantt chart schedule; and clear presentation of data sources.

Research aim and objectives

This section could lead to a researcher for getting theoretical data with respect to the research issue. It could also be imperative for the accomplishment aim and objectives of the research in the least time and cost. Furthermore, it is evaluated that there are certain sources that are considered by named books, journals, offline and online sources, and magazines. It could lead to the firm to get the data with respect to the research issue and meet the desired aim.   

Research aim

This research study is emphasized on evaluating the impact of dividend policy on firm valuation. The following objectives will be accomplished by the researcher to meet the aim of the research:

• To explore the concept of the dividend policy and firm value
• To examine the impact of dividend policy on firm value
• To suggested approaches for increasing dividend in the firm  
• What is the impact of dividend policy on the firm value?

Travlos, Trigeorgis, & Vafeas, (2015) stated that dividend policy is defined as rules and regulation that might be followed by the organization to determine the amount of profit after tax that will pay out to the specified shareholders. It is also stated that the selection of payment amount of dividend could be ultimately decided by the top management of the firm. Further, once the dividends could be declared then it cannot be simply overturned. In addition, it is examined that there are many ways by which dividends could be paid in form of cash.

In support of this, Masum (2014) examined that dividend could support the organization to improve their value and get higher profit. Cash dividends could be determined as the payments of cash from the organization ’s profit after tax to their stakeholder. Furthermore, it is evaluated that payment of dividends cannot exceed the fixed earnings of the individuals. Moreover, it is evaluated that organizations many have their authorization that could make rules and regulation for the payment of the dividends. Moreover, private organizations do not have the same requirements of disclosure.

On the other side, Renneboog & Szilagyi, (2015) illustrated that the financial strength of the firm could also be improved by the dividends. It could be a sign of financial strengths. It demonstrates that the dividend-paying organization is self-assured to create the cash flow in the upcoming period for returning of their shareholders. The organization cannot make a decision in the context of payment decision. Investigators expect to the dividend paying firm to increase dividend payments as it could be effective for making a reliable decision in the context of investment. The top management of the organization could effectively decide the amount of dividend for increasing the investors towards the organizational task.            

Apart from this, Oyinlola & Ajeigbe, (2014) stated that dividends could demonstrate the mature organization with reliable profits and sales. Mature organizations have their own dominant market conditions that tend to create free cash. It is stated that a start-up organization may not create a higher amount of money and free to tend to cash flow whatever amount it creates could reorganize it back into their business. It is evaluated that a multinational organization could use different or attractive investment options and determine the methods as it facilitates to increase investment in the organization. It could be effective for making a positive image of the firm in the marketplace.

Impact of dividend policy on firm valuation

In support of this, Priya & Mohanasundari, (2016) examined that a dividend payment might be a sign of the return on investment. The organization who has the higher share price could more influence the level of return of shareholders. Sometimes, the organization could get higher profit but they did not share the amount of profit to their shareholder that could create a problem for shareholder for investing in the same organization in the upcoming period. In addition, it is also examined that most of the organization believed that dividend payments could be signal of making a higher profit for the long term. It could also enhance the possibilities of organization sustainability in the marketplace.    

Hunjra, Ijaz, Chani, & Mustafa, (2014) suggested that shareholder could invest their property, cash, and imperative assent any particular business hence organization should need to increase the paid capital and make an opportunity to retain their shareholder for long-term. It can also be imperative for the accomplishment of the organizational task. Apart from this, it is evaluated that the organization could decrease liabilities for making higher competitive benefits. Further, the equity of shareholders could be equal to the amount that is come from the completion of total liabilities to the available total assets. If an organization has lower liabilities and expenses and higher total assets, which means there are possibilities of getting higher dividends.

Baker & Weigand, (2015) recommend that if the organization could consider some others methods then they could also improve the dividend interest level in the least time named enhancement in the net income, enhancement in outstanding shares, and enhancement in the retained earnings.  These methods could play an imperative role in the accomplishment of the organizational task.   

Research plan 

A research plan could be crucial for making a decision about research tools and techniques that will be considered by the investigator to conduct research and make a reliable decision in the context of current matter (Lashgari & Ahmadi, 2014).  Moreover, it is examined that research methodology could consider many tools to perform research named data analysis method and data collection method as it is described below:

Data collection method 

The data collection tool is crucial from the perspective of the investigator to meet the aim of the research. Furthermore, it is evaluated that once the investigator is failed to select suitable data gathering tool then it could influence the overall outcome. Finally, it could be imperative to obtain a reliable result (Yegon Cheruiyot, & Sang, 2014).  Furthermore, the information gathering tool could be determined on the basis of the research subject. If the research is emphasized on the qualitative data then the researcher could select the secondary data collection method for conducting the research.

Apart from this, it is evaluated that the secondary data collection tool could not be considered if the research is exploratory in nature. Moreover, it is evaluated that if the research scholar has selected the quantitative research they the primary data collection method will be practiced as it could be imperative for getting positive responses (Breuer, Rieger, & Soypak, 2014). Furthermore, data collection technique could be imperative for obtaining the data by different tools named primary fathering information and secondary gathering technique. For performing this study, the researcher will choose the secondary data collection tool as it facilitates to get the reliable data as compared to the primary information gathering tool.

Data collection method

This tool is more appropriate this method could secure the cost and time of the research in getting reliable information. The main reason of not section o the primary data collection that as it offers an opportunity to conduct a direct interview and make a favorable decision in the context of the current issue (Fairchild, Guney, & Thanatawee, 2014). This process could take a huge amount of cost and time consuming hence the secondary data collection tool could be more effective in performing the research and met the research issue. Apart from this, it is evaluated that researcher will consider secondary data collection tool for investigator as it permits to get a favorable outcome in the context of the impact of dividend policy on the firm value (Kumaresan, 2014).  

Furthermore, it is examined that there are many methods, which are included by the investigator such as journals, books, academic, and online and offline sources. It could also be imperative for getting a positive result. It could be effective for the completion of the research task. In addition, it is examined that there are certainly effective for the accomplishment of the organizational task (Barakat, 2014). Furthermore, it is examined that the secondary data collection tool could be crucial in enhancing the trustworthiness of the research result. It could be related to the depth understanding of the research result. Thus, it is evaluated that secondary data collecting method could be more liable as compared to the primary data collection tool (Maldajian & El Khoury, 2014).          

Data analysis method 

The data evaluation could be imperative for evaluating the gathered information and conduct the study and make a favorable decision with respect to the research matter. Further, it is evaluated that the data evaluation tool entails creation techniques to evaluate the data named quantitative and qualitative data analysis method. For this study, the investigator will consider the qualitative data analysis technique wherein the researcher will consider certain sources named content analysis method (Barakat, 2014).

This method will assist the investigator to critically examine the collected data and research at the valid conclusion. From the application of this method, it could be crucial for examining the impact of dividend policy on the organizational value. In addition, it is also examined that the data analysis tool could lead to obtain feasible information and reach at the reliable conclusion (Maldajian & El Khoury, 2014).                          

Gantt chart is an imperative tool for determining the time for the accomplishment of the research activity in the upcoming period (Kumaresan, 2014).   It could be effective in reaching a reliable conclusion. In this study, the timing of the research activity is demonstrated by the following table and chart:   

From the above table and chart, it is examined that researcher has considered many research activities named Identification of research issue, Literature Review, Data collection form the secondary data collection too, evaluation of collected data by qualitative data analysis method, and Final submission of the report. It is also evaluated that the data collection method could take more time as compared to the others research activity that could influence the overall outcome of the research. Hence, the researcher should need to comprehend this research activity for the accomplishment of the task in limited time and cost.

References

Baker, H. K., & Weigand, R. (2015). Corporate dividend policy revisited. Managerial Finance, 41(2), 126-144.

Barakat, A. (2014). The impact of financial structure, financial leverage, and profitability on industrial companies shares value (Applied study on a sample of Saudi industrial companies). Research Journal of Finance and Accounting, 5(1), 55-66.

Breuer, W., Rieger, M. O., & Soypak, K. C. (2014). The behavioral foundations of corporate dividend policy a cross-country analysis. Journal of Banking & Finance, 42, 247-265.

Fairchild, R., Guney, Y., & Thanatawee, Y. (2014). Corporate dividend policy in Thailand: Theory and evidence. International Review of Financial Analysis, 31, 129-151.

Hunjra, A. I., Ijaz, M. S., Chani, M. I., & Mustafa, U. (2014). Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices.

Kumaresan, S. (2014). Impact of Dividend Policy on Share Holders’ Wealth. International Journal of Technological Exploration and Learning, 3(1), 349-352.

Lashgari, Z., & Ahmadi, M. (2014). The impact of dividend policy on stock price volatility in the Tehran stock exchange. Kuwait Chapter of the Arabian Journal of Business and Management Review, 3(10), 273.

Maldajian, C., & El Khoury, R. (2014). Determinants of the dividend policy: An empirical study on the Lebanese listed banks. International Journal of Economics and Finance, 6(4), 240.

Masum, A. (2014). Dividend policy and its impact on stock price–A study on commercial banks listed in Dhaka stock exchange.

Oyinlola, O. M., & Ajeigbe, K. B. (2014). The impact of dividend policy on stock prices of quoted firms in Nigeria. International Journal of Economics, Commerce and Management, 11(9), 1-17.

Priya, P. V., & Mohanasundari, M. (2016). Dividend Policy and Its Impact on Firm Value: A Review of Theories and Empirical Evidence. Journal of Management Sciences and Technology, 3 (3).

Renneboog, L., & Szilagyi, P. G. (2015). How relevant is dividend policy under low shareholder protection?. Journal of International Financial Markets, Institutions, and Money.

Travlos, N. G., Trigeorgis, L., & Vafeas, N. (2015). Shareholder wealth effects of dividend policy changes in an emerging stock market: The case of Cyprus.

Yegon, C., Cheruiyot, J., & Sang, J. (2014). Effects of dividend policy on the firm’s financial performance: Econometric analysis of listed manufacturing firms in Kenya. Research Journal of Finance and Accounting, 5(12), 136-144.