Impact of Dividend Policy on Shareholders Wealth
IMPACT OF DIVIDEND POLICY ON THE MAXIMIZATION OF SHAREHOLDERS WEALTH.
BY
LASISI TIRIMISIYU KUNLE
REG NO: U08AC1128
Being A Research Project Submitted To The Department Of Accounting, Faculty Of Administration, Ahmadu Bello University Zaria, In Partial Fulfillment Of The Requirements For The Award Of Bachelor Of Science (B.Sc) In Accounting
DEPARTMENT OF ACCOUNTING
FACULTY OF ADMINISTRATION
AHMADU BELLO UNIVERSITY, ZARIA
JULY, 2012
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION 1.1 Background to the Study - - - - - - - -1 1.2 Statement of the problem - - - - - - - -4 1.3 Objective of the Study - - - - - - - -5 1.4 Research Questions - - - - - - - -6 1.5 Research Hypothesis - - - - - - - -6 1.6 Significant of the Study - - - - - - - -6 1.7 Scope and limitation of the Study - - - - - -7 1.8 Definition of Terms- - - - - - - - -7 1.9 Organization of the study - - - - - - - -9
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction - - - - - - - - - 11
2.2 Theoretical Framework- - - - - - - - -11
2.3 Dividend Policy Theories- - - - - - - -13
2.4 Review of Related Literature - - - - - - -19
2.5 Nigeria Scenario - - - - - - - - -28
2.6 Practical Factors Affecting Dividend Policy - - - - -29
2.7 Summary- - - - - - - - - -32
CHAPTER THREE RESEARCH METHODOLOGY
3.0 Introduction - - - - - - - - -34
3.1 Research Framework - - - - - - - -34
3.2 Research Design - - - - - - - - -36
3.3 Population of the study - - - - - - - -36
3.4 Sample and Sampling Techniques - - - - - -37
3.5 Data Collection - - - - - - - - -38
3.6 Research Instruction for Data Collection - - - - -38
3.7 Statistical Tools for Data Analysis and Measurement - - -39
3.8 Model Specification and Proxies Variable - - - - -40
3.9 Justification for Methodology - - - - - - -41
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - - - - -42
4.1 Presentation of Demographic Data - - - - - -42
4.2 Findings: Attitude of Dividend and Share Value - - -
BY
LASISI TIRIMISIYU KUNLE
REG NO: U08AC1128
Being A Research Project Submitted To The Department Of Accounting, Faculty Of Administration, Ahmadu Bello University Zaria, In Partial Fulfillment Of The Requirements For The Award Of Bachelor Of Science (B.Sc) In Accounting
DEPARTMENT OF ACCOUNTING
FACULTY OF ADMINISTRATION
AHMADU BELLO UNIVERSITY, ZARIA
JULY, 2012
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION 1.1 Background to the Study - - - - - - - -1 1.2 Statement of the problem - - - - - - - -4 1.3 Objective of the Study - - - - - - - -5 1.4 Research Questions - - - - - - - -6 1.5 Research Hypothesis - - - - - - - -6 1.6 Significant of the Study - - - - - - - -6 1.7 Scope and limitation of the Study - - - - - -7 1.8 Definition of Terms- - - - - - - - -7 1.9 Organization of the study - - - - - - - -9
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction - - - - - - - - - 11
2.2 Theoretical Framework- - - - - - - - -11
2.3 Dividend Policy Theories- - - - - - - -13
2.4 Review of Related Literature - - - - - - -19
2.5 Nigeria Scenario - - - - - - - - -28
2.6 Practical Factors Affecting Dividend Policy - - - - -29
2.7 Summary- - - - - - - - - -32
CHAPTER THREE RESEARCH METHODOLOGY
3.0 Introduction - - - - - - - - -34
3.1 Research Framework - - - - - - - -34
3.2 Research Design - - - - - - - - -36
3.3 Population of the study - - - - - - - -36
3.4 Sample and Sampling Techniques - - - - - -37
3.5 Data Collection - - - - - - - - -38
3.6 Research Instruction for Data Collection - - - - -38
3.7 Statistical Tools for Data Analysis and Measurement - - -39
3.8 Model Specification and Proxies Variable - - - - -40
3.9 Justification for Methodology - - - - - - -41
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - - - - -42
4.1 Presentation of Demographic Data - - - - - -42
4.2 Findings: Attitude of Dividend and Share Value - - -
References: Jun et al. (2006) examined a sample of 49 Australian institution equity funds and found evidence of the existence of the clientele effect, with institutions generally preferring to hold stocks that pay dividends and have full tax credit. 2.3.3 SIGNALING THEORY Signaling theory states that changes in dividend policy convey information about changes in future cash flows (Bhattacharya, 1997, Miller and Rock, 1985) In relation to the agency cost theory, Jensen et al (1992) and Smith and Waths (1992), added that when a firm has a force cash flow, its managers will engage in wasteful practices, even when the protection for investors improves. 2.4 REVIEW OF RELATED LITERATURE Hansen, Kumar and Shome (1994) take a broader view of what constitutes agency costs, and apply a variant of the cost minimization model to the regulated electric utility industry Empirical studies by Healy and Palepu (1988), Michaely, Thaler, and Womack (1995) and others document share-price increases on the announcement of dividend increases and dramatic share-price decreases when firms reduce dividends.