| Title : | Impact of firm specific varibles on dividend payout of Nepalese | | Material Type: | printed text | | Authors: | Mani Manandhar, Author | | Publication Date: | 2016 | | Pagination: | 98p. | | Size: | GRP/Thesis | | Accompanying material: | 4/B | | General note: | Including bibilography | | Languages : | English | | Descriptors: | Dividend policy
Dividends
| | Keywords: | 'dividend policy dividends banking' | | Class number: | 332.632 | | Abstract: | Dividend policy is the determination of the proportion of profits paid out to shareholders by the enterprise usually periodically. Firms are faced with dilemma of sharing dividend to stockholders and retaining their earning with the view to reinvesting it back into the business so as to promote further growth of the business. It is controversial topic that what and how much to pay dividend because shareholders always expect higher dividend, but the firm ensures towards setting aside funds for maximizing the shareholders wealth (Dickens, Casey, & Newman, 2002). In the Nepalese context, the declaration and payment of dividend of the enterprises are governed by company act 2006.
The review of the literature reveals the existence of many gaps of knowledge in respect of the firm specific factors affecting dividend payout, particularly in the context of Nepal. The review showed that there is a consensus amongst the academia that there is no single universal explanation that can shed light on the dividend phenomenon and the determinants driving the payout decisions of firms. The literature on dividend policy had produced a large body of theoretical and empirical studies, especially following the publication of the dividend irrelevance hypothesis of Miller & Modigliani (1961). Moreover, the literature review also reveals the existence of controversial conclusions that results from different studies made so far.
Both primary and secondary data have been used for the purpose of the study which is collected from primary questionnaire survey and annual reports of the sample banks respectively. The primary sources of data have been used to assess the opinion of respondents with respect to impact of firm specific variable on dividend payout. The questionnaire survey has been conducted to record the opinions, and perceptions of bank employees in firm specific factors affecting Nepalese dividend payout policy. Primary data has been collected through questionnaire survey among bank employees of the sample banks while 7 years data from 2007/08 to 2013/14 has been collected from various secondary sources like annual reports of sample banks and consolidated financial reports prepared by Nepal Rastra Bank. Frequency of responses, percentages and ranking have been used to analyze the primary data while descriptive statistics, correlation analysis, stepwise regressions have been carried out to examine the secondary data.
Based on the primary and secondary analysis of data return on assets, return on equity, earning per share, price earning ratio, net cash flow per share and size have positive relation with cash dividend per share and all variables were found statistically significant except net cash flow per share. The debt equity ratio has negative relation and statistically significant with cash dividend per share at 1 percent significant level. The regression result also shows that only return on equity, price earnings ratio, debt equity ratio and size were found to be statistically significant with total dividend per share. The return on equity, price earnings ratio and size were found to be positively significant whereas debt equity ratio is found to be negatively significant with total dividend per share. Based on result from primary data, earning per share, risk, return on equity, liquidity, return on assets, leverage, and size as the important factors affecting dividends in order of their respective rank from most important to least important. It is found that dividend decision has a high level of importance and the reason behind this is that it affects growth of bank and has signaling effects on shareholders. As the dividend decision holds high importance in bank and in order to make dividend decision bank also conduct studies about shareholder’s dividend preference as payout policy of the bank affects its share price.
The recommendation made by this study suggests that the investor should invest in the bank that has higher profitability, adequate liquidity and bigger size firm in order to earn more dividends. The study also suggests that investor in order to earn dividend should invest in bank that has less risk and have low leverage ratio. The banks are recommended to carry out studies on shareholder’s dividend preference in order to better understand the preference of shareholders as well. Also Nepalese banks should give consideration to return on equity, earning per share and firm size when they set dividend policy as they are found to be the most significant variables that affect dividend payout of banks |
Impact of firm specific varibles on dividend payout of Nepalese [printed text] / Mani Manandhar, Author . - 2016 . - 98p. ; GRP/Thesis + 4/B. Including bibilography Languages : English | Descriptors: | Dividend policy
Dividends
| | Keywords: | 'dividend policy dividends banking' | | Class number: | 332.632 | | Abstract: | Dividend policy is the determination of the proportion of profits paid out to shareholders by the enterprise usually periodically. Firms are faced with dilemma of sharing dividend to stockholders and retaining their earning with the view to reinvesting it back into the business so as to promote further growth of the business. It is controversial topic that what and how much to pay dividend because shareholders always expect higher dividend, but the firm ensures towards setting aside funds for maximizing the shareholders wealth (Dickens, Casey, & Newman, 2002). In the Nepalese context, the declaration and payment of dividend of the enterprises are governed by company act 2006.
The review of the literature reveals the existence of many gaps of knowledge in respect of the firm specific factors affecting dividend payout, particularly in the context of Nepal. The review showed that there is a consensus amongst the academia that there is no single universal explanation that can shed light on the dividend phenomenon and the determinants driving the payout decisions of firms. The literature on dividend policy had produced a large body of theoretical and empirical studies, especially following the publication of the dividend irrelevance hypothesis of Miller & Modigliani (1961). Moreover, the literature review also reveals the existence of controversial conclusions that results from different studies made so far.
Both primary and secondary data have been used for the purpose of the study which is collected from primary questionnaire survey and annual reports of the sample banks respectively. The primary sources of data have been used to assess the opinion of respondents with respect to impact of firm specific variable on dividend payout. The questionnaire survey has been conducted to record the opinions, and perceptions of bank employees in firm specific factors affecting Nepalese dividend payout policy. Primary data has been collected through questionnaire survey among bank employees of the sample banks while 7 years data from 2007/08 to 2013/14 has been collected from various secondary sources like annual reports of sample banks and consolidated financial reports prepared by Nepal Rastra Bank. Frequency of responses, percentages and ranking have been used to analyze the primary data while descriptive statistics, correlation analysis, stepwise regressions have been carried out to examine the secondary data.
Based on the primary and secondary analysis of data return on assets, return on equity, earning per share, price earning ratio, net cash flow per share and size have positive relation with cash dividend per share and all variables were found statistically significant except net cash flow per share. The debt equity ratio has negative relation and statistically significant with cash dividend per share at 1 percent significant level. The regression result also shows that only return on equity, price earnings ratio, debt equity ratio and size were found to be statistically significant with total dividend per share. The return on equity, price earnings ratio and size were found to be positively significant whereas debt equity ratio is found to be negatively significant with total dividend per share. Based on result from primary data, earning per share, risk, return on equity, liquidity, return on assets, leverage, and size as the important factors affecting dividends in order of their respective rank from most important to least important. It is found that dividend decision has a high level of importance and the reason behind this is that it affects growth of bank and has signaling effects on shareholders. As the dividend decision holds high importance in bank and in order to make dividend decision bank also conduct studies about shareholder’s dividend preference as payout policy of the bank affects its share price.
The recommendation made by this study suggests that the investor should invest in the bank that has higher profitability, adequate liquidity and bigger size firm in order to earn more dividends. The study also suggests that investor in order to earn dividend should invest in bank that has less risk and have low leverage ratio. The banks are recommended to carry out studies on shareholder’s dividend preference in order to better understand the preference of shareholders as well. Also Nepalese banks should give consideration to return on equity, earning per share and firm size when they set dividend policy as they are found to be the most significant variables that affect dividend payout of banks |
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