BUSN20019 Project Plan: Dividend Policy Impact on Firm Valuation

This project plan aims to investigate the impact of dividend policy on firm valuation, particularly for companies listed on the Australian Securities Exchange (ASX). The research focuses on the relationship between dividend policy and return on equity (ROE) using secondary data, including annual reports and financial data from sources like Yahoo Finance and Bloomberg. The plan identifies key research questions, such as the correlation between dividend policy and ROE, and explores the extent to which dividend policies influence firm performance. The project will utilize search terms like 'dividend policy,' 'dividends per share,' and 'return on equity' to identify relevant peer-reviewed scholarly articles. Three such articles are selected to provide insights into the factors affecting dividend policy and its impact on profitability. The research intends to contribute to the understanding of how dividend decisions affect shareholder wealth and firm value within the Australian retail sector.

Running head: IMPACT OF DIVIDEND POLICY ON FIRM VALUATION
Impact of Dividend Policy on Firm Valuation
Name of the Student:
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1IMPACT OF DIVIDEND POLICY ON FIRM VALUATION
Table of Contents
Statement detailing field of research:.........................................................................................2
Source of secondary data:..........................................................................................................3
Research questions:....................................................................................................................3
Search terms:..............................................................................................................................3
Three peer-review scholarly articles:.........................................................................................3
References:.................................................................................................................................5

2IMPACT OF DIVIDEND POLICY ON FIRM VALUATION
Statement detailing field of research:
The research will be developed with the intent to gain an understanding of the impact
of dividend policy on firm valuation, especially the firms listed in Australian Securities
Exchange. A firm always aims to maximise its value and the wealth of its shareholders. More
precisely, three kinds of financial decisions could affect the firm valuation. These mainly
include financing decisions, investment decisions and dividend decisions. These three
decisions have strong association with each other in series. The investments made by an
organisation ascertain the future gains as well as potential amount of dividend. The dividend
distribution policy ascertains the rate of equity capital within the capital structure of the
organisations, which influences the cost of capital as well. The goal of these inter-associated
decisions is to increase the wealth of the shareholders.
The corporate dividend policy aspect has drawn the attention of management scholars
as well as economists culminating into empirical investigation and theoretical modelling.
Hence, dividend policy is deemed to be one of the most complex financial aspects. The
primary question to be answered here is to find out the cash amounts that the organisations
provide back to their shareholders. In addition, it will ascertain whether the organisations
need to pay their shareholders by share repurchase or dividend payment. In case, the value of
a firm is the function of its dividend payments, dividend policy would have effect on the cost
of capital of the firm. However, the issue here is to find out whether any relationship exists
between corporate performance and dividend policy in the form of profitability, which could
be considered as return on equity (ROE). However, this research will be considering some of
the major players operating in the Australian retail sector listed in ASX.

3IMPACT OF DIVIDEND POLICY ON FIRM VALUATION
Source of secondary data:
For gathering secondary data, the researcher will use the annual reports of the chosen
organisations operating in the Australian retail sector from online sources. In addition, other
websites like Yahoo Finance and Bloomberg will be considered as well for gathering data
about the ASX, while the official site of ASX will be referred in the research. The financial
information related to dividend of the ASX firms could be obtained from the following
website: “https://www.asx.com.au/asx/markets/dividends.do”.
Research questions:
The following research questions are deemed to be appropriate:
 Is there any strong relationship between the dividend policy and return on equity of
the ASX listed organisations?
 To what extent do the dividend policies of the organisations influence their
performance or ROE?
Search terms:
The key search terms that will be used in the research include the following:
 Dividend policy
 Dividends per share
 Earnings per share
 Australian Securities Exchange
 Return on Equity
 Dividend Payout Ratio

4IMPACT OF DIVIDEND POLICY ON FIRM VALUATION
Three peer-review scholarly articles:
The three articles chosen to be used in the research, which could be found from the
reference list, will provide a brief overview of how the dividend policy of an organisation
affects its financial performance. In addition, these articles will explore the various factors
affecting the dividend policy of an organisation and in turn, effect on its profitability.

5IMPACT OF DIVIDEND POLICY ON FIRM VALUATION
References:
Anton, S.G. (2016). The impact of dividend policy on firm value. A panel data analysis of
romanian listed firms. Journal of Public Administration, Finance and Law, 10, 107-
112.
Kajola, S.O., Adewumi, A.A. & Oworu, O.O. (2015). Dividend pay-out policy and firm
financial performance: Evidence from Nigerian listed non-financial
firms. International Journal of Economics, Commerce and Management, 3(4), 1-12.
Ofori‐Sasu, D., Abor, J.Y. & Osei, A.K. (2017). Dividend policy and shareholders’ value:
evidence from listed companies in Ghana. African Development Review, 29(2), 293-
304.