Importance Of Dividend Policy

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Recommended: Dividend policy as a strategic tool

CHAPTER ONE
INTRODUCTION

1.0 INTRODUCTION
Dividend can be defined as a portion of company profit that is paid out by the corporation to their shareholders as a reward for investing in the corporation meanwhile dividend policy refers to a company’s policy which determines the amount of dividend payments and the amounts of retained earnings for reinvesting in new projects. This policy is related to dividing the firm’s earning between payment to shareholders and reinvestment in new opportunities and helps the firms to know that how they can control the agency costs by handling the Dividend policy.
Dividend policy is a very important one in the current business environment. According to Nissim & Ziv (2001), dividend policy is the regulations and guidelines that a company uses to decide to make dividend payments to the shareholders. Dividend policy is the one of the most important financial policies not only from the point of view of the company, but also from the points of view to the shareholders, the consumers, employees, regulatory bodies and the Government.
Dividend will be benefits of shareholders in return for their risk and investment where it’s determined by a different factor in organization like financing limitation, investment chances and choice, regulatory regime firm size and pressure from shareholders. However, the dividend payout of firm’s is not only the source of cash flow to the shareholders but it also offers information relating to the firm’s current and future performance.

Firm performance in this case can be viewed as how well a firm enhances its shareholders’ wealth and the capability of a firm to generate earnings from the capital invested by shareholders. Dividend policy can affect the value of the fir...

... middle of paper ...

...nd payout, revenue and total
Assets on net profit.
H1 :There is significant impact of dividend payout, revenue and total assets on net profit

3.5 STATISTICAL SOFTWARE

STATA are use in this research study which are complete, integrated statistical software package that provides everything needed for data analysis, data management and graphics. It has broad suite of statistical features, putting hundreds of statistical tools from advanced techniques like dynamic panel data (DPD) regressions and generalized estimating equations (GEE), to standards methods such as generalized linear models (GLM) and ANOVA. STATA also makes it easy to produce publication-quality and distinctly-styled graphs like regression fit graphs and distributional plots. With point-and-click interface and intuitive command syntax, STATA is fast and generates accurate results.

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