International Research Journal of Finance and Economics ISSN 1450-2887 Issue 80 (2011) © EuroJournals Publishing‚ Inc. 2011 http://www.internationalresearchjournaloffinanceandeconomics.com An Empirical Study on the Determinants of Dividend Policy in the UK Badar Khalid Al Shabibi Faculty‚ Accounting & Finance‚ Department of Business Studies Ibra College of Technology‚ Sultanate of Oman E-mail: baderkh14@hotmail.com Tel: +968-95142254; Fax: +968-25587950 G Ramesh Faculty‚ Accounting & Finance
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company and shareholders. OECD: a system a company can be directed and controlled‚ specify rights‚ responsibilities and rules; set and achieve objectives and monitor performance. A board definition consider relationship between company and stakeholders Agency theory A contract under which one or more person engage another person or persons to perform some service on their behalf Agency problem rise because of the conflict of interest between principle and agent Three specific problems: Managers
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accounting practice to be used. However‚ this theory is rather unrealistic‚ when the accounting information is treated as public product and it is available to everyone. Further on‚ ‘free-rider’ problem such as ‘certain people getting benefit from something that paid by other people ‘will distorts the market. More problems coming up when users cannot decide on what they need and accountants not satisfy on procedures. All this causes inefficiency in accounting information market. At this point‚ government intervention
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effects and signalling model are two chosen policies. Findings implied that clientele is shaped by tax preferences of shareholders which in the end will determine companies’ ideal dividend policies. It is also believed that amount of paid dividend reflects firms’ quality when asymmetric information exists (signalling model). However‚ information asymmetries are often caused by agency problems and make signalling model less reliable. Signalling model gives mix conclusion when r studies are utilising different
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(2002). The rewards to meeting or beating earnings expectations. Journal of Accounting and Economics‚ 33‚ 173-204. doi:10.1016/S0165-4101(02)00045-9 Wright‚ P.‚ Ferris‚ S Bebchuk‚ L. A.‚ & Fried J. M. (2003). Executive Compensation as an Agency Problem. The Journal of Economic Perspective‚ 17‚ 71-92. Retrieved from http://escholarship.ucop.edu/uc/item/4fc8q4f8 Jensen‚ M Taylor‚ G. K.‚ & Xu‚ R. Z. (2010). Consequences of real earnings management on subsequent operating performance. Research in Accounting
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precisely because people are motivated by things other than money. Self-interest does not mean that people have no altruistic motives. And altruism‚ the concern for the well-being of others‚ does not make a person a perfect agent who does the bidding of others. This means that agency problems cannot be solved by instilling greater altruism in people (even if we could do so). I also discuss the universal tendency of people to behave in non-rational ways. Though they are Resourceful‚ Evaluative Maximizers (the
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INTRODUCTION In early July 2007‚ the New York based hedge fund Perry Capital proposed to raise its stake in NEC Electronics Corporation (NECE)‚ the then publicly listed subsidiary of Japanese conglomerate‚ NEC Corporation‚ from 4.8 percent to 25 percent. The offering was ¥5‚000 a share‚ at about 60 percent premium. Perry’s investment in NECE traced back to late 2005‚ the year its first exposure to Asian markets‚ with the initial investment cost at around ¥3‚200 a share. Perry believed the intrinsic
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Wk1 DQs What is meant by an "agency cost" or "agency problem"? Do these interfere with shareholder wealth maximization? Why? What mechanisms minimize these costs/problems? Are executive compensation contracts effective in mitigating these costs/problems? Our textbook defines an agency problem as a “conflict between the goals of a firm’s owners and its managers” (Megginson & Smart‚ 2009). It then defines agency costs as dollar costs that arise because of this conflict. In the corporate structure
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be regulated and the merits of accounting regulations. Firstly‚ financial reports are normally prepared by the management of the company who are not the owners but are involved in managing the company. They possess more information than the shareholders and stakeholders so information asymmetry arises between them. Without regulation‚ even though management might disclose relevant accounting information voluntarily in order to get funding‚ the degree of credibility and completeness of information
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1. Agency Problems of MNCs. a. Explain the agency problem of MNCs. ANSWER: The agency problem reflects a conflict of interests between decision-making managers and the owners of the MNC. Agency costs occur in an effort to assure that managers act in the best interest of the owners. b. Why might agency costs be larger for an MNC than for a purely domestic firm? ANSWER: The agency costs are normally larger for MNCs than purely domestic firms for the following reasons
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