A Research Proposal: Examining the Nuances of Dividend Policy

This assignment presents a research proposal focused on dividend policy within organizations, emphasizing its importance in contemporary financial landscapes. It delves into the rationale behind dividend policies, highlighting their role in stock selection and cash outflow management. The research objectives include identifying issues, investigating current trends, and determining managerial decisions related to dividend policy development. Key research questions explore these areas, while the literature review provides a theoretical background rooted in organizational sustainability theory. The study also addresses issues associated with dividend policy, current trends, and managerial decision-making, employing a secondary data collection methodology and an explanatory design method to provide a comprehensive understanding of the topic. The proposal concludes by underscoring the significance of dividend policy in fostering economic growth and maximizing shareholder investments.

RESEARCH PROPOSAL ON
DIVIDEND POLICY

Introduction
• Investors can sell their equities in need
of money but they are not concerned
about the dividend policy of the
organization.
• There are mainly three approaches in
dividend policy such as stability,
residual or the two approaches in
hybrid form.
• The dividend policy needs to set by a
company in such a way that it can
fully utilize the dividend resources for
the organization to the shareholders.

Rationale
• Dividend policy plays a pivotal role in
an organization for the process of stock
selection as dividends become the
major cash outflow for the company
(Florackis, Kanas & Kostakis, 2015).
• It is an obvious matter that it will invest
its money on shareholders rather than
paying it outside (Gupta, 2017).
• Investors help in economic growth by
influencing the productive capacity of
the organization (Firth et al. 2016).

Contd…
• It is important to maintain the level of the
dividend policy in the recent years as these
dividends are smoothed from year after year,
sticky, attached to sustainable earnings of long
term and the managers after determining the
dividend policy targets on the ratio of the
long-term payouts (Booth & Zhou, 2017).
• This assignment sheds light on the importance
of dividend policy in an organization and the
use of it in recent years (Baker & Kapoor,
2015).

Research objectives
Since the dividend policy depends on
shareholders, therefore objectives of these
policies are mentioned below (Akhtar,
2018).
• To identify different issues based on
dividend policy
• To investigate the current trend of
dividend policy
• To determine managerial decisions behind
organizational dividend policy
development

Research questions
• Q1. What are the different
issues based on the dividend
policy of an organization?
• Q2. Why there is a need for
investigating the current
trend in dividend policy?
• Q3. What is the significance
of dividend policy in
developing an organization?

Literature review
Theoretical Background
• Develop in the economic, environmental and societal
systems of the organization considered as the focus of
organizational sustainability theory.
• As commented by Priya & Mohanasundari (2016),
investors and shareholders give more interest to the
company to invest their share for getting profit in
business.
• As commented by Akhtar (2018), The Company sold
their shares to institutional investors and individual or
retail investors, which known as Initial public offering
(IPO).
Issues associated with the organization dividend policy
• According to (Sáez & Gutiérrez, 2015), it is also
reliable on the past earnings and the expectation of
future earnings of a company.
• Due to this reason dividend policy of an organization
has direct link of organizational sustained status, which
becomes another issue (Jabbouri & Attar, 2018).

Contd…
The current trend of organizational dividend policy
The shareholders have to pay a higher amount of tax at the end of the year when profits
are distributed.
Kajola et al. (2015) supported this and commented that a stable dividend policy refers
to the payment of the minimum amount of dividend regularly.
The managerial decision behind organizational dividend policy
As supported by Baker & Kapoor (2015), the future dividend changes some restrictions
on policy generation with respect to current real and financial variables such as
dividends, investments, and technological parameters, which can be the reason of
evolution of economic earnings of the organization.
As supported by Sáez & Gutiérrez (2015), it will increase the importance of social
factors such as regulatory changes, social movements, Institutional, and media
pressure.

Research methods
• In this study, secondary data collection
methodology will be applied.
• Secondary data collection is free of cost and
also less time-consuming (Johnston, 2017).
• In the study, explanatory design method
will be followed.
• In this method a particular topic increases
without providing the statistical knowledge.
• Explanatory design method uses the
secondary data to provide a balanced and
wide comprehension of the assignment
(Tetnowski, 2015).

Conclusion
• This assignment is based on the research of dividend policy in an organization.
• It focuses on the aspects of this policy in the current years.
• As the role of this policy has increased in recent years the investment by the
shareholders has also increased.
• It is based on the main motives of this policy that every company need to attain
economic growth.
• The significance of this policy has risen as the shareholders re-invested it due to the
maximization of their investments in the company.
• This assignment has raised some of the questions which are based on the objectives
of the research as well as provides the major objectives faced by a company.

References
Akhtar, S. (2018). Dividend payout determinants for Australian multinational and domestic corporations. Accounting &
Finance, 58(1), 11-55.
Baker, H. K., & Kapoor, S. (2015). Dividend policy in India: new survey evidence. Managerial Finance, 41(2), 182-204.
Booth, L., & Zhou, J. (2017). Dividend policy: A selective review of results from around the world. Global Finance
Journal, 34, 1-15.
Firth, M., Gao, J., Shen, J., & Zhang, Y. (2016). Institutional stock ownership and firms’ cash dividend policies: Evidence from
China. Journal of Banking & Finance, 65, 91-107.
Florackis, C., Kanas, A., & Kostakis, A. (2015). Dividend policy, managerial ownership and debt financing: A non-parametric
perspective. European Journal of Operational Research, 241(3), 783-795.
Gupta, V. (2017). Factors Determining the Dividend Policy of a Company. Abhigyan, 35(3), 21-31.
Jabbouri, I., & Attar, A. E. (2018). The dividend paradox: a literature review. International Journal of Markets and Business
Systems, 3(3), 197-221.
Johnston, M. P. (2017). Secondary data analysis: A method of which the time has come. Qualitative and quantitative methods in
libraries, 3(3), 619-626.
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.
Priya, V., & Mohanasundari, M. (2016). Dividend Policy and Its Impact on Firm Value: A Review of Theories and Empirical
Evidence. Journal of Management Sciences and Technology, 3(3), 59-69.
Rahi, S. (2017). Research design and methods: A systematic review of research paradigms, sampling issues and instruments
development. International Journal of Economics & Management Sciences, 6(2), 1-5.
Sáez, M., & Gutiérrez, M. (2015). Dividend policy with controlling shareholders. Theoretical Inquiries in Law, 16(1), 107-130.
Tetnowski, J. (2015). Qualitative case study research design. Perspectives on Fluency and Fluency Disorders, 25(1), 39-45.