Title : | Factors affecting dividend policy of banking and non-banking enterprises: a case of Nepal | Material Type: | printed text | Authors: | Mohan K . Shrestha, Author | Publication Date: | 2015 | Pagination: | 137p. | Size: | GRP/Thesis | Accompanying material: | 5/B | General note: | Including bibilography | Languages : | English | Keywords: | 'dividends dividend policy payouts commercial banks dividend per share dividend yield return on assets return on equity' | Class number: | 332.632 | Abstract: | Despite of several empirical evidences, the dividend policy issues are still unresolved. Identification of the factors shaping the dividend payouts decision is crucial for the corporate managers and it is even more crucial in banking sectors especially in case of Nepal because most of the investors in the capital market invest in the shares of the banks. So, the empirical relationship between the dividend payouts and its determinants are stated as the research questions followed by the development of the hypotheses. The major objective of this study is to analyze the factors affecting the dividend decisions of the banks and non-banks along with the examination of empirical relationship between them.
The review of literatures has shown relationship between various factors such as earnings per share, profitability, firm’s risk, investment opportunities, leverage, size, liquidity, dividend per share, ownership structure etc. as and the dividend payout in case of both developed and emerging countries. In addition, profitability, earnings per share, firm’s risk, investment opportunities, leverage, size and liquidity are some of the variables that are found to have significant association with dividend payouts in various context. Based on the reviews, this study has proposed the conceptual framework identifying earnings per share, profitability, firm’s risk, investment opportunities, leverage, size and liquidity as the most important factors affecting the dividend decision of banks and non-banks enterprises.
For the purpose of the study 14 banks and 18 listed non-banks divided are taken as sample and required data such as dividend per share, dividend yield and market price per share and the independent variables are collected from official website of concern organization, Nepal Stock Exchange Limited (NEPSE), Security Board of Nepal (SEBON), Nepal Rastra Bank (NRB) and annual reports from respective organizations. This study collected data of sampled organizations atleast for five years to ten years. (i.e. 2003/04 to 2012/13). The data were extracted from balance sheet, income statement, cash flow statement of respective organizations. Earnings per share, price earnings ratio, total assets, leverage, profitability, liquidity and investment opportunities has been used as independent variables and dividend per share is also considered as independent variables of market price per share where as dividend per share, dividend yield and market price per share used as dependent variables. Stratified sampling method is used to select the sample of banks and non bank’s. Descriptive statistics and correlation analysis has been used as method of analysis along with different statistical test of significance for validation of model such as t-test, F-test, direction of autocorrelation and multi-colinearity and stepwise linear regression analysis.
After the data analysis, the result was found that the earnings per share, profitability, size and liquidity effect positively to dividend payout. The presence of other independent variables showed no direction of relationship. Thus, the study concludes that to increase dividend payout, firms need to increase earnings per share, profitability, size and liquidity.
Recommendation discussed includes:
To increase dividend per share of firm, firm need to increase earnings per share, price earnings ratio, profitability, total assets and cash flows.
To increase dividend yield dividend yield of firm, firm need to increase profitability and total assets.
Firm need to decrease investment opportunities to increase dividend yield.
Firm need to increase dividend per share to increase market price per share.
The report also investigates the fact that the analysis conducted has limitations. Finance companies and development banks has not been used in study, only 14 commercial banks and 18 non-banks has been used as sample due to availability of data and the study has assumed the linear relationship between dependent and independent variables.
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Factors affecting dividend policy of banking and non-banking enterprises: a case of Nepal [printed text] / Mohan K . Shrestha, Author . - 2015 . - 137p. ; GRP/Thesis + 5/B. Including bibilography Languages : English Keywords: | 'dividends dividend policy payouts commercial banks dividend per share dividend yield return on assets return on equity' | Class number: | 332.632 | Abstract: | Despite of several empirical evidences, the dividend policy issues are still unresolved. Identification of the factors shaping the dividend payouts decision is crucial for the corporate managers and it is even more crucial in banking sectors especially in case of Nepal because most of the investors in the capital market invest in the shares of the banks. So, the empirical relationship between the dividend payouts and its determinants are stated as the research questions followed by the development of the hypotheses. The major objective of this study is to analyze the factors affecting the dividend decisions of the banks and non-banks along with the examination of empirical relationship between them.
The review of literatures has shown relationship between various factors such as earnings per share, profitability, firm’s risk, investment opportunities, leverage, size, liquidity, dividend per share, ownership structure etc. as and the dividend payout in case of both developed and emerging countries. In addition, profitability, earnings per share, firm’s risk, investment opportunities, leverage, size and liquidity are some of the variables that are found to have significant association with dividend payouts in various context. Based on the reviews, this study has proposed the conceptual framework identifying earnings per share, profitability, firm’s risk, investment opportunities, leverage, size and liquidity as the most important factors affecting the dividend decision of banks and non-banks enterprises.
For the purpose of the study 14 banks and 18 listed non-banks divided are taken as sample and required data such as dividend per share, dividend yield and market price per share and the independent variables are collected from official website of concern organization, Nepal Stock Exchange Limited (NEPSE), Security Board of Nepal (SEBON), Nepal Rastra Bank (NRB) and annual reports from respective organizations. This study collected data of sampled organizations atleast for five years to ten years. (i.e. 2003/04 to 2012/13). The data were extracted from balance sheet, income statement, cash flow statement of respective organizations. Earnings per share, price earnings ratio, total assets, leverage, profitability, liquidity and investment opportunities has been used as independent variables and dividend per share is also considered as independent variables of market price per share where as dividend per share, dividend yield and market price per share used as dependent variables. Stratified sampling method is used to select the sample of banks and non bank’s. Descriptive statistics and correlation analysis has been used as method of analysis along with different statistical test of significance for validation of model such as t-test, F-test, direction of autocorrelation and multi-colinearity and stepwise linear regression analysis.
After the data analysis, the result was found that the earnings per share, profitability, size and liquidity effect positively to dividend payout. The presence of other independent variables showed no direction of relationship. Thus, the study concludes that to increase dividend payout, firms need to increase earnings per share, profitability, size and liquidity.
Recommendation discussed includes:
To increase dividend per share of firm, firm need to increase earnings per share, price earnings ratio, profitability, total assets and cash flows.
To increase dividend yield dividend yield of firm, firm need to increase profitability and total assets.
Firm need to decrease investment opportunities to increase dividend yield.
Firm need to increase dividend per share to increase market price per share.
The report also investigates the fact that the analysis conducted has limitations. Finance companies and development banks has not been used in study, only 14 commercial banks and 18 non-banks has been used as sample due to availability of data and the study has assumed the linear relationship between dependent and independent variables.
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