The Impact of Dividend Policy on Firm Performance: Shell Plc Study

This report investigates the relationship between dividend policy and firm performance, specifically focusing on Shell Plc. The study examines the impact of dividend policy on key financial variables such as Earnings Per Share (EPS), Price-to-Earnings Ratio (P/E), Dividend Payout Ratio (DPOR), Return on Assets (ROA), and Return on Equity (ROE). The research utilizes annual reports from Shell Plc and employs regression analysis to assess the correlation between these variables. The findings reveal an insignificant relationship between the independent variables (EPS, P/E, DPOR) and the dependent variables (ROA and ROE), leading to the rejection of the alternative hypotheses. Based on these results, the report recommends that Shell Plc develop a unique dividend policy structure, considering market value and the complexities of the current market environment. The study includes an overview of the company, key concepts, related theories like Agency Theory, Residual Theory, and Bird in Hand Theory, and a review of recent research on the topic.

Running head: THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
The Impact of Dividend Policy on Firm Performance: A Case Study of Shell Plc
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE 1
Abstract:
The study basically investigates the relationship between the impacts of Dividend Policy on firm
performance through evaluating the case of Shell Plc. From carrying out the research the
relationship between the selected variables such as EPS, P/E, DPOR, ROA and ROE has been
evaluated. The annual reports of Shell Limited have been used for gathering relevant data. In
addition regression analysis was carried out for analysis of the gathered data.
The international attention on the effect of dividend policy has increased and focusing on the
same the research is seeking to ascertain the existence of this impact. The findings of the
research indicate that the alternate hypotheses are rejected because of insignificant relationship
among the variables. The hypothesis is rejecting as it is observed that there is no relationship
between the dependent variable (ROA and ROE) and independent variable (EPS, P/E and
DPOR) and the coefficients table indicate negative values. Focused on such findings, the
company is recommended to develop a unique structure of dividend policy based on market
value along with analyzing the complexities within the existing market environment.

2THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Acknowledgements:
I would like to thank Professor for his constructive comments and suggestions on previous drafts
of this dissertation. I want to thank for their invaluable help with recruiting the research
participants. I also would like to thank all the research participants for their willingness to take
part in the experimental study and their insightful comments.

3THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Table of Contents
Chapter 1: Introduction....................................................................................................................5
1.1. Background Information...................................................................................................5
1.2. Research Question.............................................................................................................7
1.3. Research Aim and Objectives...........................................................................................7
1.4. Research Hypotheses........................................................................................................7
1.5. Project Structure................................................................................................................8
Chapter 2: Literature Review...........................................................................................................9
2.1. Overview of the Company....................................................................................................9
2.2. Key Concepts........................................................................................................................9
2.3. Related Theories.................................................................................................................12
2.3.1. Agency Theory of Dividends.......................................................................................12
2.3.2. Residual Theory of Dividends.....................................................................................13
2.3.3. Bird in Hand Theory....................................................................................................14
2.4. Recent Research..................................................................................................................14
Chapter 3: Research Methodology................................................................................................16
3.1 Research Philosophy............................................................................................................16
3.2 Research Approach..............................................................................................................16
3.3 Research Strategy................................................................................................................17

4THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
3.4 Research Instruments...........................................................................................................18
3.5 Sampling..............................................................................................................................18
3.6 Data Collection....................................................................................................................18
3.7 Research Ethics....................................................................................................................19
3.8 Data Analysis.......................................................................................................................19
3.9 Research Reliability and Validity........................................................................................20
3.10 Limitations.........................................................................................................................20
Chapter 4: Findings/ Results and Discussions...............................................................................21
4.1. Key Findings and Results...................................................................................................21
4.2. Discussions.........................................................................................................................24
4.3. Recommendations...............................................................................................................25
Chapter 5: Conclusion and Recommendations..............................................................................26
5.1. Summary of Findings and its Contribution........................................................................26
5.2. Recommendation................................................................................................................28
5.3. Limitations and Suggestions for Future Studies.................................................................28
References and Bibliography.........................................................................................................30

5THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Chapter 1: Introduction
1.1. Background Information
Companies are majorly focused on increasing their values along with shareholders wealth.
Generally, there are three major decision areas of the organizational management, which can
impact the performance. Such decisions are financial, dividend along with investment decisions
and such decisions are associated with one another. For instance, an investment decision
determines a company’s future gains along with the amount of the attained dividends (Vo and
Nguyen2014). There also exists a broad view globally that a company’s performance might be
impacted by the dividend policy. The international attention on the effect of dividend policy has
increased and focusing on the same the research is seeking to ascertain the existence of this
impact. Through attaining increasing interest on the research subject, the impact that the
dividend policy has on the performance of the companies remains unresolved. Researches
carried out in distinct nations have indicated different results. In addition, researchers have not
out increased attention on studies carried out in developing nations or within the less developed
industries. Potential investors pay an increased attention to the company’s value and the ways in
which the companies can maximize the shareholders wealth (Vo and Nguyen2014).
Different variables are employed by these companies in measuring the dividend policy
impact on the company’s performance. It has also been analyzed that the dividend policy might
have certain impact on the company’s performance. Based on same, it has been recognized that
ROA, dividend along with growth are negatively related with one another. Moreover, the
leverage and dividend payout ratio negatively impact the ROA along with the leverage. In
addition, it has also been analyzed that there is a significant relationship between dividend

6THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
policy and corporate profitability in consideration to return on assets, equity and earnings per
share. Moreover, profitability is measured in terms of future earnings or abnormal earnings in
which the abnormal earnings can be defined as the difference between the overall earnings
normal earnings in which the return to owners is based on level along with cost of invested
equity capital (Vo and Nguyen2014).
Considering the same, the three kinds of company decisions are related and it is also vital to
explore the effect off dividend policy of the company’s performance. In addition, most of the
researches also focused on the general effect of the dividend policy without focusing on specific
industry or organization. Considering same, the current research will focus on carrying out
research for attaining strategies in resolving concerns related with the relationship among the
selected variables in the case study of Shell Limited. The scope of the research is also to
determine the effect of dividend policy on the company performance. The research has also
examined whether or not the dividend policy affects the company performance of Shell Ltd.
Data on the performance of this company over the current five years period was taken into
consideration for analysis in order to test the research hypotheses. The research has also taken
into account the profitability of the organization, earnings per share, dividends per share, stock
process within the market, return on equity along with the retention ratio over the selected time
span over 2012 to 2017. The significance of selecting the topic of dividend policy is considering
the fact that it is an important factor for shareholders to consider in the stock selection process
the dividends are vital part of major cash outflow for the organizations. Moreover, it is also
considered that the dividends are a form of cash flow for the investors which are a vital
reflection of an organization’s value. Considering same, it is considered important for the
companies to increase their dividend per share payout. An increase in the organization’s net

7THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
profit needs to be ensuring in successfully paying out dividends to shareholders. The topic on
dividend policy has been selected as it can facilitate in analyzing company performance as the
firm value is observed to increase in a situation where the cash flow retained by companies are
higher than dividends paid (Yarram and Dollery 2015). For this reason analyzing the
effectiveness of the dividend policy is selected as a research topic in evaluating company
performance of Shell Plc.
1.2. Research Question
The research question that will be answered through completion of the study is indicated
below:
 Does the dividend policy impact the performance of Shell Plc?
1.3. Research Aim and Objectives
The aim of the research is to analyze Impact of Dividend Policy on Firm Performance
through evaluating the case of Shell Plc.
The research objectives those are set for the current research are explained below:
 To determine the dividend policy impact on the company’s performance
 To analyze the ways in which dividend policy impacts earnings per share and
profitability of Shell Plc
 To carry out the review of literature followed by critical valuation of debt along with
finally representing the findings of the evaluation.

8THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
1.4. Research Hypotheses
 H1: Efficient dividend policy has a positive impact on the earnings per share of the
company
 H2: Effective dividend policy has a positive impact on price earnings ratio of the
company
 H3: Effectiveness in dividend policy developed by the companies can positively impact
the dividend payout ratio of companies
1.5. Project Structure
The first chapter explained the background information, research objectives along with the
research questions for the current study. The second chapter focused on explaining the existing
and previous literature on the theories of dividend policy along with explaining the key concepts
related with the research. The third chapter explained the methodology based on which the data
gathered was analyzed. The fourth chapter explained the findings, results and discussions from
the current study along with providing relevant recommendations based on such study
outcomes. The fifth chapter explained the conclusion and recommendations gathered from the
research along with explaining the limitations and suggestions for the future studies on the
dividend policy impact on company’s performance.

9THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Chapter 2: Literature Review
2.1. Overview of the Company
Shell Plc is an US-based wholly owned subsidiary of Royal Dutch Shell Plc, which is the
sixth biggest global oil and gas organization. The primary goal of the organization is to cater the
global growing need for more and cleaner energy solutions in ways, which are environmentally,
socially and economically responsible (Shell.com 2019). The strategy of the organization is to
strengthen its position as a leading energy organization by providing gas, oil and low-carbon
energy in the form of global energy system transforms. For this, it has formulated a number of
strategic ambitions, which are enumerated briefly as follows:
 Increasing returns and growing cash flow developed upon a resilient portfolio and sound
financial framework
 To thrive in the transition of energy by providing response to the desire of the society for
competitive, convenient and cleaner energy
 To sustain a sound societal license for making positive contributions to the society
through its business activities
2.2. Key Concepts
The key concepts associated with this research include the dependent and independent
variables and they are discussed as follows:
Dividend Policy:
Khan et al. (2016) defined dividend policy as the guidelines employed by the
organizations in determining the amount of profit paid to the shareholders., the time for paying

10THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
dividends, the form of a dividend to pay along with the payment intervals. These researchers also
stated that there exist a correlation between payments, dividends and market value of companies.
Other researchers have indicated that dividend policy serves as a guideline employed by
companies in distributing wealth to its shareholders. Dividend policy varies from one company
to another but sustainable dividend payout system indicates efficient management. Kajola,
Adewumi and Oworu (2015) research results indicated that the impact of dividend policy on the
financial performance of companies listed in NSE where various variables were used such as
dividend payment, leverage and size of companies. In contrast, Suryanto (2016) conducted
research on analyzing relationship between dividend policy and company performance listed in
Nigeria. This research tested three hypotheses; conversely, the first study is most suitable in this
research. Considering such augments from previous empirical researches it can be stated that
there is a relationship between dividend policy and company performance that was observed
through studies conducted in developed nations.
Dividend payout ratio (DPOR):
Dividend payout ratio is the percentage of total dividend amount paid to the shareholders
in relation to the net income of an organization (Yegon, Cheruiyotand Sang2014). With the help
of this ratio, it is possible to identify the amount of money returned to the shareholders against
the amount kept for reinvestment in growth, settlement of debt or addition to cash reserves
(retained earnings). In contrast, other researches defined dividend payout ratio as a fraction of net
income that is paid by an organization to its shareholders as a part of dividends. The high
dividend payout ratios might be consider better for a short time but it might not last long over
years.

11THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Earnings per share (EPS):
Earnings per share could be defined as the portion of profit of an organization assigned to
each share of common stock. It acts as an indicator of the profitability of an organization and it is
common for the organization to report earnings per share, which are adjusted for dilution of
potential shares and extraordinary items (Vo and Nguyen2014). Other researchers stated that an
organization with increased earnings per share ratio is able to attaining a considerable dividend
for investors it this might flow them back within the business for attaining hi growth.
Price/earnings ratio (PER):
Khan et al. (2016) defined that this ratio assists in the valuation of an organization, which
gauges its existing share price in relation to earnings per share. Thus, this ratio assists the
investors in ascertaining the market value of a stock in contrast to the earnings of the
organization. On the other hand, few other researchers have indicated that PER indicates the
dollar amount an investor can expect to invest within the organizations for attaining a single
dollar of the company’s earnings. Price earnings ratio is referred as the price multiple as it
indicates the amount which investors are willing to pay per dollar of earnings (Florackis, Kanas
and Kostakis 2015).
Return on assets:
Return on assets provides the managers, analysts or investors with an idea regarding the
efficiency of the management of an organization in utilizing its assets for generation of earnings.
A higher number is always favorable, since it denotes that the organization is earning more
money from less investment (Oyinlolaand Ajeigbe2014).

12THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Return on equity:
Return on equity assists in gauging financial performance to determine the efficacy of the
management of a firm in using its equity for generating profits. Moreover, this ratio assists in the
estimation of dividend growth rates and sustainable growth rates (Gamayuni2015).
2.3. Related Theories
Different theories could be used for explaining the issues confronting dividend policy. In
this research, three such theories would be discussed and they are listed as follows:
2.3.1. Agency Theory of Dividends
Agency theory is derived from the contractual relationship between the managers and the
shareholders. Agency costs mainly occur owing to the conflict between two parties. It is a
common practice by organizations to distribute free cash flow to the shareholders for raising
dividend payments and minimize agency costs. Even if there is absence of free cash flow for an
organization, the shareholders might still find the dividend payments to be valuable for
controlling the overinvestment problem. According to Velnampy, NimalthasanandKalaiarasi
(2014), dividends minimize this issue, as dividend payments increase frequency with which the
organizations have to go to the equity markets for obtaining additional capital. In the procedure
of gaining new equity, the organizations subject them to disciplining and monitoring of the
markets. As a result, agency costs are reduced. Jabbouri (2016) indicated that the agency theory
of dividends assumes that a huge scale earnings retention which encourages the managers
behavior which do not increase shareholders value. This theory of dividends serves as a valuable
financial tool for these companies as these avoid the capital structures which facilitate the
managers a broad discretion for making value decreasing investments. Boumosleh and Cline

13THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
(2015) added that there has been considerable research those have identifiedthe determinants
related with the corporate dividend policy. It is relied on the idea that the monitoring if the
organization along with its management is supportive in decreasing agency conflicts. In addition,
it has also been observed that underpinning the theory there exist a cost minimization model.
This model also includes transaction cost which might be controlled through raising the payout
ratio (Chong, Ting and Cheng 2017).
2.3.2. Residual Theory of Dividends
According to this theory, the payment of dividends is made from the residual profit after
the subtraction of the needed investment funds (Khan et al. 2016). More specifically, the interest
of the management is on making investments rather than distributing dividends to the
shareholders. This is because the management is of the notion that maximization of shareholders’
wealth is possible only through profit reinvestments and not by paying dividends. Moreover,
dividend policy is treated as irrelevant in this theory and hence, payment of dividends could be
made when retained earnings exceed the needed investment amount (Kajola, Adewumiand
Oworu2015). From the financial viewpoint, dividend payments could be utilized for denoting
enhanced financial performance by business organizations.
The most significant advantage of this theory is that it minimizes to the new stock
issuances and flotation costs. The disadvantage of this theory is that it does not have any
particular target clients. Along with this, it involves the variable dividend risk. The residual
dividend policy assists in setting a target payout. Before selecting this policy, the earnings to be
retained for backing up the capital budget are crucial to be computed. However, there would be
fluctuation in dividend payable after the adoption of this policy. Al-dhamari, Ismail, Izah and Al-
Gamrh (2016) explained that this theory of dividends policy considers that the organization will

14THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
just have to pay the dividend from the residual earnings. This is through considering that
dividends must be paid only if the funds sustain after the optimal capital expenditure level has
taken place which considers that all the sustainable investment opportunities have been financed.
Nguyen and Giang (2015) added that this theory ensure that the companies must maintain a
stable dividend policy that is beneficial to both the company along with the investors in lieu of
the fact that it is a sign of continued normal operations of the organizations.
2.3.3. Bird in Hand Theory
Suryanto (2016) revealed that the theory of “Bird in hand Theory” stated that the
dividends are paid out in the manner of the residual profit after deducting the necessary
investment funds. In other wordsit has also been stated that the management is highly interested
in investments along with not paying necessary dividends to the shareholders. It is also believed
by the management that the shareholders wealth can be maximized by reinvesting profits along
with not paying the dividends. Priya and Mohanasundari (2016) added that the residual dividends
theory considers dividend policy as irrelevant and for this reason dividends can just be paid at the
time the retained earnings are in excess of the needed amount for reinvestment. From the
financial perspective, the dividend payments can be employed in indicating enhanced financial
performance by the companies. Anwaar (2016) stated that within the theory of bird in hand,
stocks having the high dividend payout are sought by the investors that consequently demand the
increased market price. In addition it is also agreed that this theory of the dividend policy was
developed in response to the dividends irrelevance theory that states that there is no impact on
the value of the organization. This theory assumes that an organization is financed by equity and
not by using the debt finance (Gamayuni 2015).

15THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
2.4. Recent Research
From the previous empirical research works it has been observed that there is a
connection between the firm performance and dividend policy. The considerable connection is
mostly revealed by studies carried out within developed nations (Yusof and Ismail 2016). The
current research is attempted to examine whether or not the general effect of dividend policy on
company’s performance can be revealed within the financial statements of Shell Plc over the
years. The literature along with the theoretical reviews indicates the significance of the research
subject. The previous researches also maintained a significant connection among the dividend
payout along with value of the company (Byoun, Chang and Kim 2016). For this reason, the
literature has also considered that the dividend policy has an effect on the performance of the
company. The current research also attempted to expand on the existing literature through
analyzing the impact regarding the ways in which two variables of the research are associated in
deciding the performance of Shell Plc (Mehdi, Sahut and Teulon 2017).

16THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Chapter 3: Research Methodology
3.1 Research Philosophy
With the help of research philosophy, the researcher could identify the essence of the
study by utilizing suitable research paradigm. Research philosophy is mainly of four types that
constitute of positivism, interpretive, realism and pragmatism. However, for this particular
research, the researcher has selected pragmatism, since it assists in increasing the accuracy and
reliability of outcomes (Brannen 2017). Moreover, this philosophy allows the use of several
methods in the research. Furthermore, research question is the most significant determinant of
this philosophy. In this case, the determinant has been identified as dividend policy for which
pragmatism is deemed to be fit for this research.
Figure 3.1: Types of research philosophies
(Source: As created by author)
Research Philosophies
Positivism Interpretivism Realism Pragmatism

17THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
3.2 Research Approach
Research approach is basically of two types, which include inductive and deductive
research approaches. For this study, the researcher has used deductive research approach, since it
assists in testing and formulation of hypothesis. The research hypothesis has been supported by
observation of the data behaviors associated with firm value and dividend policy and the adopted
deductive approach provides support to the same. On the other hand, the researcher has not used
inductive research approach in this study, since there would be no formulation of any new theory
or model after arriving at the research outcomes (Choy 2014).
Figure 3.2: Types of research approaches
(Source: As created by author)
3.3 Research Strategy
As indicated by Flick (2015), research strategy signifies the approach, which has been
utilized for accumulation of data. In order to conduct the research, the researcher has followed
the case study approach, since it would assist in gaining a detailed overview of the concerned
organization, which is Shell Plc. Moreover, secondary financial data have been extracted from a
Research
Approaches
Inductive
Approach
Deductive
Approach

18THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
variety of reliable sources for hypothesis testing in relation to the performance of the mentioned
organization over the previous five years (Rohov and Solesvik 2016).
3.4 Research Instruments
For conducting this research, the researcher has two available choices, which include
qualitative and quantitative. The numbers are used for quantitative data, while qualitative data
are explained by opinions. In this study, the researcher has followed quantitative approach, since
deductive approach supports the same (Kumar 2019). Quantitative approach concentrates on
secondary data analysis, since in-depth overview could be obtained about the research variables.
Moreover, according to the research onion, time horizons are mainly longitudinal and cross-
sectional (Ledford and Gast 2018). This researcher paper has used the cross-sectional time
horizon. Along with this, the resources that have been used for this study include theories studied
in books and other journal articles obtained from library software. The data about Shell Plc have
gathered from the company website of the organization.
3.5 Sampling
Sampling denotes the technique, in which a predetermined number of observations are
obtained from a bigger population (Mackey and Gass 2015). In this research, the sample size
denotes the number of organizations from the overall population. The current study has focused
on the sixth largest global oil and gas organization in terms of revenue in 2016, which is Shell
Plc. The population size for the oil and gas organization is a big one.
3.6 Data Collection
A research could be conducted either with primary data or secondary data (Quinlan et al.
2019). Primary data are gathered on the part of a persona for a particular objective. Secondary

19THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
data could be identified as the available data from different sources and they are generally reused
from the works of other persons. The focus of this research paper has been on the secondary
data. The information extracted from the financial statements of Shell Plc has taken into account
its level of net income and the same has been utilized for ascertaining its overall financial
performance. At the same time, information related to payment of dividends, total assets, total
equity and total liabilities of Shell Plc has been utilized so that its dividend policy could be
ascertained effectively (Baker and Weigand 2015). For instance, information like form and
number of dividend payments per annum has been obtained from the website of the organization
as well.
3.7 Research Ethics
The researcher has followed the needed code of conduct so that tasks could be performed
suitably in different processes of data collection. The secondary data have been accumulated
from the annual reports of Shell Plc published online in order to assure the trustworthiness of the
research results (Riaz, Liu and Ahmad 2016). Moreover, the researcher has ensured complete
confidentiality of the study. After arriving at the research outcomes, the researcher would not
entertain any business use of the research instruments.
3.8 Data Analysis
The data obtained have been analyzed by using a number of analytical methods. The
analysis has been carried out with the intent to investigate the effect of dividend policy on the
performance of Shell Plc for the past five years. Regression analysis has been used after sorting
the accumulated data in order to determine the effect of the independent variable on the
dependent variable (Aguenaou, Farooq and Di 2017). The analysis has been performed with the
help of SPSS software. After conduction of such analysis, the outcomes have been interpreted

20THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
and the researcher has drawn an inference followed by providing appropriate recommendations
to Shell Plc that would aid the organization in enhancing its overall financial performance in the
long-run. Descriptive analysis was carried out in this researcher as this facilitated the researcher
in explaining the basic features of data within the research. Through offering simple summaries
regarding sample and measures facilitated in efficient completion of quantitative analysis.
Correlation analysis has been carried out in this research as it facilitated the researcher in analyze
the strength of relationship among the selected dependent and independent variables in the
research (Khalid and Rehman 2015). Correlation analysis also facilitated in analyzing the cause-
and-effect relationships among the dependent variable (ROA and ROE) and independent variable
(EPS, P/E and DPOR). Regression analysis was carried out in this study as this facilitated the
researcher in analyzing the relationship between two or more research variables. The results
gathered from the regression analysis facilitated in taking decisions on rejecting or accepting the
developed hypotheses through analyzing the influence of dependent variable (ROA and ROE) on
independent variables (EPS, P/E and DPOR) (Pucheta-Martínez and López-Zamora 2017).
3.9 Research Reliability and Validity
The researcher has undertaken full efforts to gather the required data from the most valid
and authentic source, which is the company website of Shell Plc. Moreover, the reliability test
has been made by SPSS software, in which relevant tests have been performed to interpret the
gathered data (Hamdan 2018).
3.10 Limitations
The genuineness of information has been identified as the significant restraint resulting in
barriers between the accomplishment of the research and its related outcomes (Walliman 2017).
Moreover, the researcher has focused only on the performance of Shell Plc to analyze the impact

21THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
of dividend policy on its financial performance and no comparison has been made with its
competitors. Furthermore, industry analysis would have provided more fruitful outcomes, which
is again identified as a significant limitation for this particular research (Handorf 2016).
Chapter 4: Findings/ Results and Discussions
4.1. Key Findings and Results
1. Regression Results
1.1. ROA
Model Summary
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .998a .995 .981 .002445
a. Predictors: (Constant), DPOR, P/E, EPS
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression .001 3 .000 71.322 .000
Residual .000 1 .000
Total .001 4
a. Dependent Variable: ROA
b. Predictors: (Constant), DPOR, P/E, EPS
Coefficientsa

22THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.B Std. Error Beta
1 (Constant) .066 .150 .438 .737
EPS -.001 .040 -.050 -.022 .986
P/E -.001 .001 -.754 -.531 .689
DPOR -.842 2.471 -.380 -.341 .791
a. Dependent Variable: ROA
1.2. ROE
Model Summary
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .997a .995 .979 .005170
a. Predictors: (Constant), DPOR, P/E, EPS
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression .005 3 .002 62.268 .093b
Residual .000 1 .000
Total .005 4
a. Dependent Variable: ROE
b. Predictors: (Constant), DPOR, P/E, EPS

23THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.B Std. Error Beta
1 (Constant) .227 .317 .717 .604
EPS -.028 .085 -.814 -.329 .798
P/E -.002 .002 -1.240 -.816 .564
DPOR -3.175 5.225 -.724 -.608 .652
a. Dependent Variable: ROE
2. Correlation Results
Correlations
EPS P/E DPOR ROA ROE
EPS Pearson Correlation 1
P/E Pearson Correlation -.934* 1
DPOR Pearson Correlation -.891* .672 1
ROA Pearson Correlation .993** -.962** -.842 1
ROE Pearson Correlation .990** -.966** -.832 1.000** 1
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
3. Descriptive statistics
Statistics
EPS P/E DPOR ROA ROE

24THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
N Valid 5 5 5 5 5
Missing 1 1 1 1 1
Mean 1.4800 30.9240 .02440 .02780 .05640
Median 1.5600 17.8000 .02800 .03300 .06800
Mode .30a 9.96a .028 .006a .013a
Std. Deviation 1.02927 26.10640 .008081 .017922 .035423
Variance 1.059 681.544 .000 .000 .001
Range 2.30 60.37 .019 .040 .078
Minimum .30 9.96 .015 .006 .013
Maximum 2.60 70.33 .034 .046 .091
Sum 7.40 154.62 .122 .139 .282
a. Multiple modes exist. The smallest value is shown
From analyzing the regression results the relationship between the dependent variable
(ROA and ROE) and independent variables (DPOR, EPS and EPS) was analyzed. It was
gathered from the regression annova table that the dependent variable ROA is not positively
impacted by DPOR, EPS and P/E at 0.001% significance level. Analysis of the regression
coefficients indicated that the coefficient significance of EPS is 0. 798 that is not significant with
the dependent variable ROE at the P value of 0 which is less than 0.05 and hence, not significant.
The significance value of P/E value of is 0.564 that is not significant with the ROE as its P value
of 0 which is less than 0.05 and indicates non-significant relationship. The significant value of
DPOR is 0.652 at the P value of 0 which is less than 0.05. From analyzing such results it can be
gathered that there is no positive impact of dividend payout ratio and earnings per share on
corporate profitability through indicating increase in return on assets and return on equity. It has

25THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
also been revealed that a negative significant relation is revealed between dividend payment
along with ROE and ROA which facilitates in developing effective dividend decision policy on
corporate profitability.
4.2. Discussions
From analyzing the study findings and results, it has been gathered that in the Shell
Limited Company there is an increased influence of its dividend policy on the company’s
performance. The results have also suggested that in a situation there is an increase in the
company’s dividends an exceptional finical performance can be observed through attaining
increase in return on assets in comparison to other companies those have eliminated their
dividends for the year. In addition, it has also been justified from the research findings that the
impact of dividend policy on corporate profitability of Shell Limited is indicated on terms of
return on equity of the company (Chandra, Sadalia and Siburian 2017). Moreover, it can be
stated that the dividend policy of the company reveals the organizations profitability and
considering the same the managers must devote enough time along with effort in designing a
dividend policy which can improve the firm value along with company profitability. A
statistically insignificant relation is revealed among earnings per share and dividend payout after
controlling for growth, size along with leverage for the dividend paying company like Shell
Limited. The findings stressed on the fact that an effective dividend policy of Shell Limited
serves as a major factor impacting the company’s earnings of dividend paying company.
Considering the same, the managers of the company need to be aware to decide whether to
distribute earnings among the shareholders or retaining them for investment in future. The
findings from the research also confirmed that the dividend decision in Shell Limited serves as a
practice that the management follows in making cash distributions to its shareholders that

26THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
ultimately enhances its return in equity and return on assets. Moreover, the findings also revealed
that growth in the net income per share can result from an increase in shareholder equity per
share that can ensure sustainability growth rate at which sales can increase without depleting its
financial resources.
4.3. Recommendations
Based on the findings from the research, Shell Plc is recommended certain approaches to
enhance its dividend policy for attaining better performance in the market.
 The company is recommended to implement effective strategies in increasing its earnings
pershare in order to ensure improvement in its performance. Through attaining an
increased revenue growth the company will be able to attain an increased EPS that can
further ensure improvement in its Return on Assets and Return in Equity. For increasing
revenue, Shell Plc can diversify into other new business segments.
 Another recommendation that can be offered to ShellPlc in increasing its ROA and ROE
is through improving its dividend payout ratio. This can be ensured by the company
through ensuring an increase in its yearly dividend payments along with sustaining its
dividend yield in the future years. Through increasing its growth prospects based on the
global crude oil prices.
Chapter 5: Conclusion and Recommendations
5.1. Summary of Findings and its Contribution
The research indented to analyze the ways in which dividend policy impacts earnings per
share and profitability of Shell Plc. It was gathered from the research that the international
attention on the effect of dividend policy has increased and focusing on the same the research is

27THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
seeking to ascertain the existence of this impact. The findings of the research indicate that the
alternate hypotheses are rejected because of insignificant relationship among the variables. The
hypothesis is rejecting as it is observed that there is no relationship between the dependent
variable (ROA and ROE) and independent variable (EPS, P/E and DPOR) and the coefficients
table indicate negative values. Through attaining increasing interest on the research subject, the
impact that the dividend policy has on the performance of the companies remains unresolved.
Researches carried out in distinct nations have indicated different results. Moreover, it is also
gathered that the considerable connection is mostly revealed by studies carried out within
developed nations. The current research is attempted to examine whether or not the general
effect of dividend policy on company’s performance can be revealed within the financial
statements of Shell Plc over the years. The literature along with the theoretical reviews indicates
the significance of the research subject. In carrying out the research regression analysis has been
used after sorting the accumulated data in order to determine the effect of the independent
variable on the dependent variable. The analysis has been performed with the help of SPSS
software.
After conduction of such analysis, the outcomes have been interpreted and the researcher has
drawn an inference followed by providing appropriate recommendations to Shell Plc that would
aid the organization in enhancing its overall financial performance in the long-run. The research
hypothesis has been supported by observation of the data behaviors associated with firm value
and dividend policy and the adopted deductive approach provides support to the same. On the
other hand, the researcher has not used inductive research approach in this study, since there
would be no formulation of any new theory or model after arriving at the research outcomes.
From the findings of the research it has been gathered that the dividend policy of the company

28THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
reveals the organizations profitability and considering the same the managers must devote
enough time along with effort in designing a dividend policy which can improve the firm value
along with company profitability. A statistically insignificant relation is revealed among
earnings per share and dividend payout after controlling for growth, size along with leverage for
the dividend paying company like Shell Limited. The findings from the research also confirmed
that the dividend decision in Shell Limited serves as a practice that the management follows in
making cash distributions to its shareholders that however does not have drastic impact on
enhancing its return in equity and return on assets.
Moreover, the findings also revealed that growth in the net income per share can result from
an increase in shareholder equity per share that can ensure sustainability growth rate at which
sales can increase without depleting its financial resources. Moreover, the leverage and dividend
payout ratio negatively impact the ROA along with the leverage. In addition, it has also been
analyzed that there is an insignificant relationship between dividend policy and corporate
profitability in consideration to return on assets, equity and earnings per share. Moreover,
profitability is measured in terms of future earnings or abnormal earnings in which the abnormal
earnings can be defined as the difference between the overall earnings normal earnings in which
the return to owners is based on level along with cost of invested equity capital.
5.2. Recommendation
The company is recommended to implement effective strategies in increasing its earnings
per share in order to ensure improvement in its performance. Through attaining an increased
revenue growth the company will be able to attain an increased EPS that can further ensure
improvement in its Return on Assets and Return in Equity. For increasing revenue, Shell Plc can
diversify into other new business segments. The company is also recommended to develop a

29THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
unique structure of dividend policy based on market value along with analyzing the complexities
within the existing market environment. In order to increase its net profits, the company must
focus on increasing its net profits from which the dividend payment is done. This can be done
through merging with other oil and gas company in order to position itself as leading Energy
Company through offering low carbon energy system changes. Implementing such strategies is
deemed to improve the company’s dividend payout ratio which will indicate that the company is
financially sound adequate enough to support continuous positive dividends yield for investors.
5.3. Limitations and Suggestions for Future Studies
The results if the current paper is just based on a limited data for a limited time and
considering the same, the future research must consider increasing the time period for attaining
better analysis regarding impact of dividend policy on the company’s performance. The current
research just focused on a single company to analyze the dividend policy impact on performance.
This might impact the reliability and genuinely of the gathered research findings along with the
study outcomes. Considering such limitation, the future research might focus on considering
analysis of the dividend policies of a few more companies in attaining a better insight on the
research subject.

30THE IMPACT OF DIVIDEND POLICY ON FIRM PERFORMANCE
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