Dividend

Only available on StudyMode
  • Download(s) : 36
  • Published : March 11, 2013
Open Document
Text Preview
TABLE OF CONTENTS
List of Tables

i

List of Figures

iv

Abstract

v

Key Terms

ix
CHAPTER-1
Introduction

1.1 Introduction to Dividends

1

1.2 A Short History of Dividend Policy

6

1.3 Dividend Policy

9

1.4 Economic Rationale to Dividends

12

1.5 Dividend Policy and its Linkages with other Financial Policies

15

1.6 Pure Vs Smoothed Residual Dividend Policy

16

1.7 Dividend Declaration Process

17

1.8 Alternative Forms of Dividends

18

1.8.1 Stock Repurchases or Share buy Backs

19

1.8.2 Bonus Shares

19

1.8.3 Stock Splits

20

1.9 Declarations and Distribution of Dividends by a Company under Indian Law 20 1.9.1 Legal Regime

21

1.9.2 Mode of Declaration

21

1.9.3 Prohibition

22

1.9.4 Steps Involved in the Process of Declaration and
Distribution of Dividend

22

1.10 Dividend Payment Patterns across the Life Cycle of a Firm.

24

1.11 Dividend Distribution and its Impact on Shareholders Value

26

1.12 Dividend Payments: An Indian Scenario

29

1.13 Dividend Policy: The Global Perspective

36

1.13.1 Dividend Size and Frequency across the World

36

1.13.2 Institutional Features

37

1.13.3 Tax Differences

37

1.13.4 Dividend Payout Patterns around the World

39

1.14 Relevance and Scope of the Study

40

1.15 Chapter Plan

41

1.16 Conclusions

42

CHAPTER 2
Literature Review
2.1 Modigliani &Miller Approach (Dividend Irrelevance Proposition) (1961) 2.1.1. Conclusion
2.2 Dividend Policy and Agency Problems

44
46
47

2.2.1. Overview

47

2.2.2 Shareholders versus Debt Holders

47

2.2.3 The Differtial Impact of Dividends on Various Claimholders

49

2.2.4. Similar Conflicts

50

2.2.4.1 Shareholders versus Managers

51

2.2.4.2 Ownership versus Control

51

2.2.5 The Easterbrook Analysis (1984)

51

2.2.6 The Jensen Analysis (1986)

53

2.2.7 Other Empirical Studies on Agency Conflicts:

54

2.2.8 Conclusions

59

2.3 Dividend Policy and Asymmetric Information

60

2.3.1. Signaling Models

61

2.3.2. John and Williams Model (1985)

62

2.3.3. Bhattacharya Model (1979)

63

2.3.4. Miller and Rock Model (1985)

64

2.3.5 Other Theoritical Models

64

2.3.5.1 Dividend Smoothing

64

2.3.5.2. Dividend versus Share Repurchases

66

2.3.5.3 Choice of Signals

66

2.3.6. Announcement Effects

68

2.3.7. Changes in Market Expectations

72

2.3.8. Predictions of Future Earnings

72

2.3.9 Dividend Signaling Considering Investment
Opportunities and Insider Trading

74

2.3.9.1. Lang and Litzenberger Study

74

2.3.9.2. John and Lang Study

75

2.3.10 Conclusions

76

2.4. Models of Symmetric Information and Empirical Research

76

2.4.1. Dividends and Taxes

76

2.4.2. The Tax Environment in USA

77

2.4.3 Dividend Yields and Risk-Adjusted Returns

78

2.4.3.1. The Theory

78

2.4.3.2. The Evidence of the Brennan Model

78

2.4.3.3 The Black-Scholes Experiment

79

2.4.3.4. The Litzenberger and Ramaswamy Experiment

80

2.4.3.5. The Miller and Scholes Critique

80

2.4.4 The Ex- Dividend Day Studies
2.4.4.1 The Theory

81
81

2.4.5 Ex-Dividend Day and Cross-Sectional Studies

84

2.4.5.1 Kalay and Michaely (1993)

84

2.4.5.2. Tax-Induced Clienteles-Empirical Evidence

84

2.4.6 Conclusion

86

2.5 Corporate Dividend Policy Decisions

87

2.5.1. The Lintner Survey

87

2.5.2. Studies on Lintner Model across Different Countries

91

2.5.3. The Impact of Dividend Policy on Investment

92

2.5.4. Subsequent Dividend Model Research: Survey Researches

93

2.5.5 Survey Research on Payout Policy

96

2.5.6 Empirical Studies in India

97

CHAPTER 3
Overview of the Industry
3.1 Indian IT Sector

108

3.2 Industry Structure

108

3.3. IT Services, ITES –BPO, Engineering and R&D Service Segment...
tracking img