The Impact of Dividend Policy on Firm Performance: Shell Plc

Research Proposal 1
Research Proposal
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Research Proposal 2
Table of Contents
1. Terms of Reference...........................................................................................................2
1.1. Background of study....................................................................................................2
1.2. Problem Statement.......................................................................................................2
1.3. The objective of the study............................................................................................3
1.4. The scope of your study...............................................................................................3
2. Relevant Literature...........................................................................................................3
2.1. Financial performance................................................................................................3
2.2. Dividend Policy...........................................................................................................4
2.4. Theoretical review.......................................................................................................6
a) Agency theory.............................................................................................................6
b) Residual theory of dividends.......................................................................................6
c) Bird in the hand theory................................................................................................6
3. Methodology......................................................................................................................8
3.1. A statement of the methodology...................................................................................8
3.1.1. Research Philosophy............................................................................................8
3.1.2. Research Approach..............................................................................................8
3.1.3. Research strategy.................................................................................................9
3.1.4. Research choice....................................................................................................9
3.1.5. Research design....................................................................................................9
3.2. Data Source.................................................................................................................9
3.3. Data analysis.............................................................................................................10
References List.......................................................................................................................11

Research Proposal 3
Title:
The impact of dividend policy on firm performance: Shell Plc
1. Terms of Reference
1.1. Background of study
Organisations mainly focus on maximising their values and shareholders' wealth. Generally,
there are three types of decisions that have an impact on a company's value. The decisions
are; financial decisions, dividend decisions, and investment decisions. The three decisions are
related to each other. For example, an investment decision determines the firm's future gains
as well as the amount of dividend earned. As such dividend policy influence the capital
structure and cost as well (Browne, 2016. p, 69). There is a wide view globally that dividend
policy affects a firm's performance. The global attention on the impact of dividend policy has
increased so is the study seeking to ascertain the existence of such an impact.
1.2. Problem Statement
Amid the increasing interest on the topic, the impact that dividend policy has on
organisational performance remain unresolved. Studies conducted in different countries have
shown different results. Moreover, researchers have always ignored studies conducted in
developing countries or in less developed industries. Potential investors pay special attention
to the firm's value and how best is the firm in maximising the shareholders' wealth (Gitman,
et al., 2015, p. 113). Considering that the three types of firm decision are connected, it is
important to explore the impact of dividend policy on firm performance. Moreover, most
studies focus on a general impact of dividend policy without narrowing down to a specific
industry or company. This study seeks to resolve the unresolved issues surrounding the
relationship between the two variables by a focus on the Shell Plc. as the case study.

Research Proposal 4
1.3. The objective of the study
The main objective of the study is to determine the impact of dividend policy on firm
performance. The specific objective is to explore how dividend policy affects Shell Plc.
earnings per share and profitability.
The research question to be answered is: Does dividend policy impact the performance of
Shell Plc.?
Research hypothesis: Dividend policy has a significant impact on firm performance.
1.4. The scope of your study
The objective of the study is to determine the impact of dividend policy on firm performance.
The study will examine whether or not dividend policy impacts the performance of Shell Plc.
Data on the performance of the Shell Company over the recent ten year period will be
analysed to test the research hypothesis. The study will be considered the profitability of the
company, earning per share, dividend per share, return on equity, stock prices in the market
and retention ratio over the 2007 to 2017 study period.
2. Relevant Literature
2.1. Financial performance
There are different ways of measuring a firm's financial performance. The methods of
measuring performance include sales growth, market to book value, cash flow and
profitability. After every financial year, investors are interested in knowing the amount to
earn that will be retained for reinvestment and the amount that will be paid to them in the
form of dividends. Profitability is the most common measure of a firm's performance; an
increase in profitability indicate a positive performance. Some ratios used to measure the