West Nile Virus Diseases Assignment Example | Topics and Well Written Essays - 500 words

West Nile Virus Diseases - Assignment Example A descriptive study would help one gather data more efficiently since it includes collection of data, occurrence of a disease, its characteristics, number of people affected and their signs & symptoms more accurately. Also, a descriptive study helps a scientist collect data more efficiently when they decide to find out the prevalence of disease in a particular group of people. West Nile Virus starts with fever and might lead to neurological symptoms. Neurological involvement may lead to disabilities and permanent damage to the affected individuals. Also, this disease has caused a certain number of deaths in the USA and its different States which makes it rather important for the government to handle. Educating the people of my state would be the first step in order to control the rate of this disease. Education involves letting the people know about the signs and symptoms of the disease. Letting them know when to contact their local health authorities if they suspect a disease. Also, pest control and educating the people about controlling mosquitos in their homes and use mosquito repellants is necessary since mosquitos are the prime vectors of this disease. The control of this disease on the level of a community can be done only by raising awareness in the people about this disease and its causative factors as well as how the transmission can be controlled. Also, screening the blood of donors in endemic zones should be made necessary to control the disease. The disease in the form of an epidemic can be devastating in a community whereas an endemic disease can be harmful to families too. If the disease progresses to its neuroinvasive stage, it can lead to disabilities and cause stress as well as financial troubles in families. Also, death of a certain family member can be devastating too. Apart from CDC, Office of Surveillance, Epidemiology and Lab services, Office of Infectious

The Security Breach at Nelm Case Study Example | Topics and Well Written Essays - 500 words

The Security Breach at Nelm - Case Study Example However, there are serious flaws in the system configuration and the access control. The first concern should be that an insider might be acquiring the information in question. There are currently members of the sales, engineering, and production that are sharing the files on the LAN. The files should be restricted and only available on a need to know basis. There should only be a limited number of people in the marketing department that have access to the advertising files. This would eliminate unauthorized access to this sensitive information by a member of the production or engineering staff. If the attack is coming from an outside source, system access needs to be secured and limited. This may be done by the addition of an effective User ID and password system. The system should require regular changing of the passwords and have a mechanism to lockout the user after a limited number of failed attempts to stop a brute force attack. In addition, IP address monitoring should be implemented and users should be restricted to entering the system only from approved IPs. This would prevent off site hackers from gaining access to the system. To further secure the system, the Web server needs to be properly configured. The web based e-mail system will give unauthorized users a portal that may be exploited if the server has security flaws in it.

Influences on Dividend Payout Decisions

Influences on Dividend Payout Decisions CHAPTER ONE INTRODUCTION The intricacies of Dividends and Dividend policy can leave even the most seasoned financial professional feeling a little uneasy. While conventional wisdom suggests that paying dividends affects both firms value and shareholder wealth to retain earnings to explore growth opportunities, much debate still surrounds this dynamic discipline; especially when it comes to how dividend decisions can lead to value maximization Kent (2003). Dividend policy is an important component of the corporate financial management policy. It is a policy used by the firm to decide as to how much cash it should reinvest in its business through expansion or share repurchases and how much to pay out to its shareholders in dividends. Dividend is a payment or return made by the firm to the shareholders, (owners of the company) out of its earnings in the form of cash. For a long time, the subject of corporate dividend policy has captivated the interests of many academicians and researchers, resulting in the emer gence of a number of theoretical explanations for dividend policy. For the investors, dividend serve as an important indicator of the strength and future prosperity of the business, thereby companies try to maintain a stable dividend because if they reduce their dividend payments, investors may suspect that the company is facing a cash flow problem. Investors prefer steady growth of dividends every year and are reluctant to investment to companies with fluctuating dividend policy. Over time, there has been a substantial increase in the number of factors identified in the literature as being important to be considered in making dividend decisions. Thus, extensive studies have been done to find out various factors affecting dividend payout ratio of a firm. However, there is no single explanation that can capture the puzzling reality of corporate dividend behavior. Ocean deep judgment is involved by decision makers to resolve this issue of dividend behavior. The decision of companies t o retain or pay out the earnings in form of dividends is important for the maximization of the value of the firm (Oyejide, 1976). Therefore, companies should set a constructive target dividend payout ratio, where it pays dividends to its shareholders and at the same time maintains sufficient retained earnings as to avoid having raise funds by borrowing money. A tough challenge was faced by financial practitioners and many academics, when Miller and Modigliani (MM) (1961) came with a proposition that, given perfect capital markets, the dividend decision does not affect the firm value and is, therefore, irrelevant. This proposition was greeted with surprise because at that time it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy and that a properly managed dividend policy had an impact on share prices and shareholder wealth. Since the M M study, many researchers have relaxed the assumption of perfect capital markets and stated theories about how managers should formulate dividend policy decisions. Problem Statement Dividend policy has attracted a substantial amount of research by many researchers and theorists, who have provided theoretical as well as empirical observations, into the dividend puzzle (Black, 1976). Even though researchers and theorists have extended their studies in context to dividend decisions, the issue as to why corporations distribute a portion of their earnings as dividends is not yet resolved. The issue of dividend policy has stimulated much debate among financial analysts since Lintners (1956) seminal work. He measured major changes in earnings as the key determinant of the companies dividend decisions. There are many factors that affect dividend decisions of a firm as it is very difficult to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders resulting into increase or decrease of the firms value, but the primary indicator of the firms capacity to pay dividends has been Profits. Miller and Modigliani (1961), DeAngelo and DeAngelo (2006) gave their proposition on the dividend irrelevance, but the argument made by them was on assumptions that werent practical and in fact, the dividend payout decision does affect the shareholders value. The study focuses on identifying various determinants of dividend payout and whether these factors influence the dividend payout decision. Research Objective: There are many theories in the corporate finance literature addressing the dividend issue. The purpose of study is to understand the factors influencing the dividend decision of companies. The specific objectives of this study are: To analyze the financials of the company to draw a framework of factors such as Retained earnings, Age of the company, Debt to Equity, Cash, Net income, Earnings per share etc. responsible for dividend declaration. To understand the criticality of a companys profitability (in terms of Earnings per share) component in declaration of dividends. To measure each factor individually on how it affects the dividend decision. Research Questions: Q1. What is the relation between dividend payout and firms debt? Q2. What is the relation between dividend payout and Profitability? Q3. What is the relation between dividend payout and liquidity? Q4. What is the relation between dividend payout and Retained Earnings? Q5. What is the relation between dividend payout and Net Income? Scope of the Study: This study investigates areas of concern that are extensive thereby due to limitation of time; the scope of research will be limited as the period of study is only three years 2006-2008. The study is focused only on firms trading on NYSE and has considered only those firms who pay dividends. Organization of the paper: The remaining chapters will be organized as follows: Chapter Two: Literature Review This chapter discusses the Determinants of Dividend payout and the theories behind the research questions in context to the Dividend policy. Chapter Three: Research Methodology The chosen research design, data collection and statistical tests for analysis are described in the chapter. Chapter four: Data Analysis and Findings: To address the research questions, results obtained from the regression analysis will be presented and discussed. Chapter five: Recommendations and Conclusion. This chapter provides recommendations for the future research and a conclusion for all this research. CHAPTER TWO LITERATURE REVIEW Dividend remains one of the greatest enigmas of modern finance. Corporate dividend policy is an important decision area in the field of financial management hence there is an extensive literature devoted to the subject. Dividends are defined as the distribution of earnings (present or past) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy refers to managements long-term decision on how to utilize cash flows from business activities-that is, how much to plow back into the business, and how much to return to shareholders (Khan and Jain, 2005). Lintner (1956) conducted a notable study on dividend distributions, his was the first empirical study of dividend policy through his interview with managers of 28 selected companies, he stated that most companies have clear cut target payout ratios and that managers concern themselves with change in the existing dividend payout rather than the amount of the newly established payout. He also states that, Dividend policy is set first and other policies are then adjusted and the market reacts positively to dividend increase announcements and negatively to announcements of dividend decreases. He measured major changes in earnings as the key determinant of the companies dividend decisions. Lintners study was expanded by Farrelly et al. (1988), who, mailed a questionnaire to 562 firms listed on the New York Stock Exchange and concluded that managers accept dividend policy to be relevant and important. Lintners view was also supported by the study results of Fama and Babiak (1968) and Fama (1974) who suggested that managers prefer a stable dividend policy, and are hesitant to increase dividends to a level that cannot be supported. Fama and Babiaks (1968) study also concludes that Net income appears to explain the dividend change decision better than a cash flow measure. The study by Adaoglu (2000), Amidu and Abor (2006) and Belans et al (2007) stated that net income shows positive and significant association with the dividend payout, therefore indicating that, the firms with the positive earnings pay more dividends. Merton Miller and Franco Modigliani (1961) made a proposition that the value of a firm is not affected by its dividend policy. Dividend policy is a way of dividing up operating cash flows among investors or just a financial decision. Financial theorists Martin, Petty, Keown, and Scott, 1991 supported this theory of irrelevance. Miller and Modiglianis conclusion on the irrelevance of dividend policy presented a tough challenge to the conventional wisdom of time up to that point, it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy as investors seem to prefer dividends over capital gains (JM Samuels, FM.Wilkes and R.E Brayshaw). Benartzi et al. (1997) conducted an extensive study and concluded that Lintners model of dividends remains the finest description of the dividend setting process available. Baker et al. (2001) conducted a survey on 630 NASDAQ-listed firms and analyzed the responses from 188 CFOs about the importance of 22 different factors that influence their dividend policy, they found that the dividend decisions made by managers were consistent with Lintners (1956) survey results and model. Their results also suggest that managers pay particular attention to the dividend policy of the firm because the dividend decision can affect firm value and, in turn, the wealth of stockholders, thus dividend policy requires serious attention by the management. E.F Fama and K.R French (2001) investigated the characteristics of companies paying dividends and concluded that the top most characteristics that affect the decision to pay dividends are Firm size, Profitability, and Investment opportunities. They studied dividend payment in the United States and found that the proportion of dividend payers declined sharply from 66% in 1978 to 20.8% in 1999, and that only about a fifth of public companies paid dividends. Growth companies such as Microsoft, Cisco and Sun Microsystems were found to be non-dividend payers. They also explained that the probability that a firm would pay dividends was positively related to profitability and size and negatively related to growth. Their research concluded that larger firms are more profitable and are more likely to pay dividends, than firms with more investment opportunities. The relationship between firm size and dividend policy was studied by Jennifer J. Gaver and Kenneth M. Gaver (1993). They suggested t hat A firms dividend yield is inversely related to the extent of its growth opportunities. The inference here is that as cash flow increases, the coefficient of dividend decreases, indicating that smaller firms that have greater investment opportunities thus they tend not to make dividend payment while larger firms tend to have proactive dividends policy. Ho, H. (2003) undertook a comparative study of dividend policies in Japan and Australia. Their study revealed that dividend policies in Australia and Japan are affected by different financial factors. Dividend policies are affected positively by size in Australia and liquidity in Japan. Naceur et al (2006) examined the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. His research indicated that highly profitable firms with more stable earnings could afford larger free cash flows and thus paid larger dividends. Li and Lie (2006) reported that large and profitable firms are more likely to raise their dividends if the past dividend yield, debt ratio, cash ratio are low. A study was conducted by Norhayati Mohamed, Wee Shu Hui, Mormah Hj.Omar, and Rashidah Abdul Rahman on Malaysian companies over a 3 year period from 2003-2005. The sample was taken from the top 200 companies listed on the main board of Bursa Malaysia based on market capitaliza tion as at 31December 2005. Their study concluded that bigger firms pay higher dividends. or the purpose of finding out how companies arrive at their dividend decisions, many researchers and theorists have proposed several dividend theories. Gordon and Walter (1963) presented the Bird in Hand theory which suggested that to minimize risk the investors always prefer cash in hand rather than future promise of capital gain. This theory asserts that investors value dividends and high payout firms. As said by John D. Rockefeller (an American industrialist) The one thing that gives me contentment is to see my dividend coming in. For companies to communicate financial well-being and shareholder value the easiest way is to say the dividend check is in the mail. The bird-in-hand theory (a pre-Miller-Modigliani theory) asserts that dividends are valued differently to capital gains in a world of information asymmetry where due to uncertainty of future cash flow, investors will often tend to prefer dividends to retained earnings. As a result the value of the firm would be increased as a higher payout ratio will reduce the required rate of return (see, for example Gordon, 1959). This argument has not received any strong empirical support. Dividends, paid by companies to shareholders from earnings, serve as an important indicator of the strength and future prosperity of the business. This explanation is known as signaling hypothesis. Signaling is an example factor for the relevance of dividends to the value of the firm. It is based on the idea of information asymmetry between managers and investors, where managers have private information about the firm that is not available to the outsiders. This theory is supported by models put forward by Miller and Rock (1985), Bhattacharya (1979), John and Williams (1985). They stated that dividends can be used as a signaling device to influence share price. The share price reacts favorably when an announcement of dividend increase is made. Few researchers found limited support for the signaling hypothesis (see Gonedes, 1978, Watts, 1973) and there are other researchers, who supported the hypothesis, for example, in Michaely, Nissim and Ziv (2001), Pettit (1972) and Bali (2003). The tax-preference theory assumes that the market valuation of a firms stocks is increased when the dividend payout ratios is low which in turn lowers the required rate of return. Because of the relative tax liability of dividends compared to capital gains, investors need a large amount of before-tax risk adjusted return on stocks with higher dividend yields (Brennan, 1970). On one side studies by Lichtenberger and Ramaswamy (1979), Poterba and Summers, (1984), and Barclay (1987) have presented empirical evidence in support of the tax effect argument and on the other side Black and Scholes (1974), Miller and Scholes (1982), and Morgan and Thomas (1998) have either opposed such findings or provided completely different explanations. The study by Masulis and Trueman (1988) model dividend payments in form of cash as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm dividend policy. As the tax l iability on dividends increases (decreases), the dividend payment decreases (increases) while earnings reinvestment increases (decreases). According to Farrar and Selwyn (1967), in a partial equilibrium framework, individual investors choose the amount of personal and corporate leverage and also whether to receive corporate distributions as dividends or capital gains. Barclay (1987) has presented empirical evidence I support of the tax effect argument. Others, including Black and Scholes (1982), have opposed such findings or provided different explanations. Farrar and Selwyns model (1967) made an assumption that investors tend to increase their after tax income to the maximum. According to this model corporate earnings should be distributed by share repurchase rather than the use of dividends. Brennan (1970) has extended Farrar and Selwyns model into a general equilibrium framework. Under this, the expected usefulness of wealth as a system of barter is maximized. Despite being more robust both the models are similar as regards to their predictions. According to Auerbachs (1979) discrete-time, infinite-horizon model, the wealth of shareholders is maximized by the shareholders themselves and not by firm market value. If there does, infact, exist a difference between capital gains and dividends tax; firm market value maximization is no longer determined by wealth maximization. He states that the continued undervaluation of corporate capital leads to dividend distributions. The clientele effects hypothesis is another related theory. According to this theory the investors may be attracted to the types of stocks that fall in with their consumption/savings preferences. That is, investors (or clienteles) in high tax brackets may prefer non-dividend or low-dividend paying stocks if dividend income is taxed at a higher rate than capital gains. Also, certain clienteles may be created with the presence of transaction costs. There are several empirical studies on the clientele effects hypothesis but the findings are mixed. Studies by Pettit (1977), Scholz (1992), and Dhaliwal, Erickson and Trezevant (1999) presented evidence consistent with the existence of clientele effects hypothesis whereas studies by Lewellen et al. (1978), Richardson, Sefcik and Thomason (1986), Abrutyn and Turner (1990), found weak or contrary evidence. There is an assumption that the managers do not always take steps which would lead to maximizing an investors wealth. This gives rise to another favorable argument for hefty dividend payouts which shifts the reinvestment decision back on the owners. The main hitch would be the agency conflict (conflict between the principal and the agent) arising as a result of separate ownership and control. Therefore, a manager is expected to move the surplus funds from the high retained earnings into projects which are not feasible. This would be mainly due to his ill intention or his in competency. Thus, generous dividend payouts increase a firms value as it reduces the managements access to free cash flows and hence, controlling the problem of over investment. There are many more agency theories explaining how dividends can increase the value of a firm. One of them was by Easterbrook (1984); he proposed that dividend payments reduce agency problems in contrast to the transaction cost theory which is of the view that dividend payments reduce the value as it forces to raise costly finances from outside sources. His idea is that if the dividends are not paid, there is a problem of collective action that tends to lead to hap-hazard management of the firm. So, dividend payouts and raising external finance would attract auditory and regulatory measures by financial intermediaries like investment banks, respective stock exchange regulators and the potential investors as well. All this monitoring would lead to considerable reduction of agency costs and appreciate the market value of t he firm. Moreover, as defined by Jenson and Meckling (1976), Agency costs=monitoring costs+ bonding, costs+ residual loss i.e. sum of agency cost of equity and agency cost of debt. Hence, Easterbrook (1984) noted that dividend payments and raising new debt and its contract negotiations would reduce potential for wealth transfer. The realization for potential agency costs linked with separation of management and shareholders is not new. Adam Smith (1937) proposed that management of earlier companies is wayward. This problem was highly witnessed during at the time of British East Indian Companies and tracking managers was a failure due to inefficiencies and high costs of shareholder monitoring (Kindleberger, 1984). Scott (1912) and Carlos (1922) differ with this view point. They agree that although some fraud existed in the corporations, many of the activities of the managers were in line with those of the shareholders interests. An opportune and intelligent manager should always invest the surplus cash available into those opportunities which are well researched to be in the best interest of the shareholders. Berle and Means (1932) was the first to discover the insufficient utilization of funds which are surplus after other investment opportunities taken by the management. This thought was further promoted by Jensens (1986) free cash flow hypothesis. This hypothesis combined market information asymmetries with the agency theory. The surplus funds left after all the valuable projects are largely responsible for creation of the conflict of interest between the management and the shareholders. Payment of dividends and interest on other debt instruments reduce the cash flow with the management to invest in marginal net present value projects and for other perquisite consumptions. Therefore, the dividend theory is better explained by the combination of both the agency and the signaling theory rather than by any o ne of these alone. On the other hand, the free cash flow hypothesis rationalizes the corporate takeover frenzy of the 1980s Myers (1987 and 1990) rather than providing a clear and comprehensive dividend policy. The study by Baker et al. (2007) reports, that firms paying dividend in Canada are significantly larger and more profitable, having greater cash flows, ownership structure and some growth opportunities. The cash flow hypothesis proposes that insiders to a firm have more information about future cash flow than the outsiders, and they have incentivized motives to leak this to outsiders. Lang and Litzenberger (1989) check the cash flow signaling and free cash flow explanations of the effect of dividend declarations on the stock prices. This difference between permanent and temporary changes is also explored in Brook, Charlton, and Hendershott (1998). However, this study is based on the hypothesis that dividend changes contain cash flow information rather than information about earnings. This is the cash flow signaling hypothesis proposing that dividend changes signal expected cash flows changes. The dividend decisions are affected by a number of factors; many researchers have contributed in determining which determinant of dividend payout is the most significant in contributing to dividend decisions. It is said that the primary indicator of the firms capacity to pay dividends has been Profits. According to Lintner (1956) the dividend payment pattern of a firm is influenced by the current year earnings and previous year dividends. Pruitt and Gitmans (1991) survey of financial managers of 1000 largest U.S companies about the interplay among the investment and dividend decisions in their Firms reported that, current and past year profits are essential factors influencing dividend payments. The conclusion derived from Baker and Powells (2000) survey of NYSE-listed firms is that the major determinant is the anticipated level of future earnings and continuity of past dividends. The study of Aivazian, Booth, and Cleary (2003) concludes that profitability and return on equity positively correlate with the size of the dividend payout ratio. The study by Lv Chang-jiang and Wang Ke-min (1999) on 316 listed companies in China that paid cash dividends during 1997 and 1998 by using modified Lintner dividend model, suggested that the dividend payout ratio is due to the firms current earning level. Other researchers like Chen Guo-Hui and Zhao Chun-guang (2000), Liu Shu-lian and Hu Yan-hong (2003) also concluded their research on the above stated understanding about dividend policy of listed companies in China. A survey done by Baker, Farrelly, and Edelman (1985) and Farrelly, Baker, and Edelman (1986) on 562 New York Stock Exchange (NYSE) firms with normal kinds of dividend polices in 1983 suggested that the major determinants of dividend payments were the anticipated level of future earnings and the pattern of past dividends. DeAngelo et al. (2004) findings suggest that earnings do have some impact on dividend payment. He stated that the high/increasing dividend concentration may be the result of high/increasing earnings concentration. Goergen et al. (2005) study on 221 German firms shows that net earnings were the key determinants of dividend changes. Baker and Smith (2006) examined 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to understand how they set their dividend policies. Their study showed that for the matched firms, the pattern of past dividends and desire to maintain a long-term dividend payout ratio elicit the highest level of agreement from respondents. The study by Ferris et al. (2006) found mixed results for the relation between a firms earnings and its ability to pay dividends. Kao and Wu (1994) used a time series regression analysis of 454 firms over the period of 1965 to1986, and showed that there was a positive relationshi p between unexpected dividends and earnings. Carroll (1995) used quarterly data of 854 firms over the period of 1975 to 1984, and examined whether quarterly dividend changes predicted future earnings. He found a significant positive relationship. Liquidity is also an important determinant of dividend payouts. A poor liquidity position would generate fewer dividends due to shortage of cash. Alli et.al (1993), reveal that dividend payments depend more on cash flows, which reflect the companys ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. They claim current earnings do no really reflect the firms ability to pay dividends. A firm without the cash flow back up cannot choose to have a high dividend payout as it will ultimately have to either reduce its investment plans or turn to investors for additional debt. The study by Brook, Charlton and Hendershott (1998) states that, Firms expecting large permanent cash flow increases tend to increase their dividend. Managers do not increase dividends until they are positive that sufficient cash will flow in to pay them (Brealey-Myers-2002). Myers and Bacons (2001) study shows a negative relationship between the liquid ratio and dividend payout. For companies to enable them to enhance their dividend paying capacity, and thus, to generate higher dividend paying capacity, it is necessary to retain their earnings to finance investment in fixed assets. The study by Belans et al (2007) states that the relationship between the firms liquidity and dividend is positive which explains that firms with more market liquidity pay more dividends. Reddy (2006), Amidu and Abor (2006) find opposite evidence. Lintner (1956) posited that the level of retained earnings is a dividend decision by- product. Adaoglu (2000) study shows that the firms listed on Istanbul Stock Exchange follow unstable cash dividend policy and the main factor for determining the amount of dividend is earning of the firms. The same conclusion was drawn by Omet (2004) in case of firms listed on Amman Securities Market and he further states that the tax imposition on dividend does not have the significant impact on the dividend behavior of the listed firms. The study by Mick and Bacon (2003) concludes that future earnings are the most influential variable and that the past dividend patterns as well as current and expected levels are empirically relevant in explaining the dividend decision. Empirical support for Lintners findings, that dividends were indeed a function of current and past profit levels and were negatively correlated with the change in sales was found by Darling (1957), Fama and Babiak (1968). Benchman a nd Raaballe (2007) discovered that the propensity to pay out dividends is positively correlated to retained earnings. Also, the study by Denis and Osobov (2006) states that retained earnings are a significant dividend characteristic for non- US firms including UK, German, and French firms. One of the motives for dividend policy decision is maintaining a moderate share price as poor stock price performance mostly conveys negative information about firms reputation. An empirical research took by Zhao Chun-guang and Zhang Xue-li et al (2001) on all A shares listed companies listed in Shenzhen and Shanghai Stock Exchange, states that the more cash dividends is paid when the stock prices are high. Chen Guo-Hui and Zhao Chun-guang (2000) undertook a research on all A shares listed before 1996 and paid dividend into share capital in 1997 as their sampling, and employed single-factor analysis, multifactor regression analysis to analyze the data. Their research showed a positive stock price reaction to the cash dividend, stock dividend policy. Myers and Bacon (2001) discussed that the debt to equity ratio was positively correlated to the dividend yield. Therefore firms with relatively more investment opportunities would tend to be more geared and vice versa (Ross, 2000). The study by Hu and Liu, (2005) declares that there is a positive correlation between the cash dividend the companies pay and their current earnings, and a inverse relationship between the debt to total assets and dividends. Green et al. (1993) questioned the irrelevance argument and investigated the relationship between the dividends and investment and financing decisions .Their study showed that dividend payout levels are decided along with investment and financing decisions. The study results however do not support the views of Miller and Modigliani (1961). Partington (1983) declared that firms motives for paying dividends and extent to which dividends are decided are independent of investment policy. The study by Higgins (1981) declares a direct link between growths and financing needs, rapidly growing firms have external financing needs because working capital needs normally exceed the incremental cash flows from new sales. Higgins (1972) suggests that payout ratios are negatively related to firms need top fund finance growth opportunities. Other researchers like Rozeff (1982), Lloyd et al. (1985) and Collins et al. (1996) all show significantly negative relationship between historical sales growth and dividend payout whereas D, Souza (1999) however shows a positive but insignificant relationship in the case of growth and negative but insignificant relationship in case of market to book value. Jenson and Meckling (1976) find a strong relationship between dividends and investment opportunities. They explain, in some circumstances where firms have relative uptight disposable cash flow and a number of investment opportunities have, the shareholders are ready to accept low dividend payout ratio. From the investors point of view, the dividend payments represent definite evidence of a companys worth. A company that expects sufficient future cash flows, large enough to meet debt obligations and dividend payments, will increase dividend payout. Howe (1998) believed that the actions of the managers might convey information to the investors outside as they are more informed about the future prospects of their firms than the market. Reddy (2002) studied dividend behavior and expressed his views on the observed behavior with the help of signaling hypothesis. The undervalued firms (assessed by the price Influences on Dividend Payout Decisions Influences on Dividend Payout Decisions CHAPTER ONE INTRODUCTION The intricacies of Dividends and Dividend policy can leave even the most seasoned financial professional feeling a little uneasy. While conventional wisdom suggests that paying dividends affects both firms value and shareholder wealth to retain earnings to explore growth opportunities, much debate still surrounds this dynamic discipline; especially when it comes to how dividend decisions can lead to value maximization Kent (2003). Dividend policy is an important component of the corporate financial management policy. It is a policy used by the firm to decide as to how much cash it should reinvest in its business through expansion or share repurchases and how much to pay out to its shareholders in dividends. Dividend is a payment or return made by the firm to the shareholders, (owners of the company) out of its earnings in the form of cash. For a long time, the subject of corporate dividend policy has captivated the interests of many academicians and researchers, resulting in the emer gence of a number of theoretical explanations for dividend policy. For the investors, dividend serve as an important indicator of the strength and future prosperity of the business, thereby companies try to maintain a stable dividend because if they reduce their dividend payments, investors may suspect that the company is facing a cash flow problem. Investors prefer steady growth of dividends every year and are reluctant to investment to companies with fluctuating dividend policy. Over time, there has been a substantial increase in the number of factors identified in the literature as being important to be considered in making dividend decisions. Thus, extensive studies have been done to find out various factors affecting dividend payout ratio of a firm. However, there is no single explanation that can capture the puzzling reality of corporate dividend behavior. Ocean deep judgment is involved by decision makers to resolve this issue of dividend behavior. The decision of companies t o retain or pay out the earnings in form of dividends is important for the maximization of the value of the firm (Oyejide, 1976). Therefore, companies should set a constructive target dividend payout ratio, where it pays dividends to its shareholders and at the same time maintains sufficient retained earnings as to avoid having raise funds by borrowing money. A tough challenge was faced by financial practitioners and many academics, when Miller and Modigliani (MM) (1961) came with a proposition that, given perfect capital markets, the dividend decision does not affect the firm value and is, therefore, irrelevant. This proposition was greeted with surprise because at that time it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy and that a properly managed dividend policy had an impact on share prices and shareholder wealth. Since the M M study, many researchers have relaxed the assumption of perfect capital markets and stated theories about how managers should formulate dividend policy decisions. Problem Statement Dividend policy has attracted a substantial amount of research by many researchers and theorists, who have provided theoretical as well as empirical observations, into the dividend puzzle (Black, 1976). Even though researchers and theorists have extended their studies in context to dividend decisions, the issue as to why corporations distribute a portion of their earnings as dividends is not yet resolved. The issue of dividend policy has stimulated much debate among financial analysts since Lintners (1956) seminal work. He measured major changes in earnings as the key determinant of the companies dividend decisions. There are many factors that affect dividend decisions of a firm as it is very difficult to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders resulting into increase or decrease of the firms value, but the primary indicator of the firms capacity to pay dividends has been Profits. Miller and Modigliani (1961), DeAngelo and DeAngelo (2006) gave their proposition on the dividend irrelevance, but the argument made by them was on assumptions that werent practical and in fact, the dividend payout decision does affect the shareholders value. The study focuses on identifying various determinants of dividend payout and whether these factors influence the dividend payout decision. Research Objective: There are many theories in the corporate finance literature addressing the dividend issue. The purpose of study is to understand the factors influencing the dividend decision of companies. The specific objectives of this study are: To analyze the financials of the company to draw a framework of factors such as Retained earnings, Age of the company, Debt to Equity, Cash, Net income, Earnings per share etc. responsible for dividend declaration. To understand the criticality of a companys profitability (in terms of Earnings per share) component in declaration of dividends. To measure each factor individually on how it affects the dividend decision. Research Questions: Q1. What is the relation between dividend payout and firms debt? Q2. What is the relation between dividend payout and Profitability? Q3. What is the relation between dividend payout and liquidity? Q4. What is the relation between dividend payout and Retained Earnings? Q5. What is the relation between dividend payout and Net Income? Scope of the Study: This study investigates areas of concern that are extensive thereby due to limitation of time; the scope of research will be limited as the period of study is only three years 2006-2008. The study is focused only on firms trading on NYSE and has considered only those firms who pay dividends. Organization of the paper: The remaining chapters will be organized as follows: Chapter Two: Literature Review This chapter discusses the Determinants of Dividend payout and the theories behind the research questions in context to the Dividend policy. Chapter Three: Research Methodology The chosen research design, data collection and statistical tests for analysis are described in the chapter. Chapter four: Data Analysis and Findings: To address the research questions, results obtained from the regression analysis will be presented and discussed. Chapter five: Recommendations and Conclusion. This chapter provides recommendations for the future research and a conclusion for all this research. CHAPTER TWO LITERATURE REVIEW Dividend remains one of the greatest enigmas of modern finance. Corporate dividend policy is an important decision area in the field of financial management hence there is an extensive literature devoted to the subject. Dividends are defined as the distribution of earnings (present or past) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy refers to managements long-term decision on how to utilize cash flows from business activities-that is, how much to plow back into the business, and how much to return to shareholders (Khan and Jain, 2005). Lintner (1956) conducted a notable study on dividend distributions, his was the first empirical study of dividend policy through his interview with managers of 28 selected companies, he stated that most companies have clear cut target payout ratios and that managers concern themselves with change in the existing dividend payout rather than the amount of the newly established payout. He also states that, Dividend policy is set first and other policies are then adjusted and the market reacts positively to dividend increase announcements and negatively to announcements of dividend decreases. He measured major changes in earnings as the key determinant of the companies dividend decisions. Lintners study was expanded by Farrelly et al. (1988), who, mailed a questionnaire to 562 firms listed on the New York Stock Exchange and concluded that managers accept dividend policy to be relevant and important. Lintners view was also supported by the study results of Fama and Babiak (1968) and Fama (1974) who suggested that managers prefer a stable dividend policy, and are hesitant to increase dividends to a level that cannot be supported. Fama and Babiaks (1968) study also concludes that Net income appears to explain the dividend change decision better than a cash flow measure. The study by Adaoglu (2000), Amidu and Abor (2006) and Belans et al (2007) stated that net income shows positive and significant association with the dividend payout, therefore indicating that, the firms with the positive earnings pay more dividends. Merton Miller and Franco Modigliani (1961) made a proposition that the value of a firm is not affected by its dividend policy. Dividend policy is a way of dividing up operating cash flows among investors or just a financial decision. Financial theorists Martin, Petty, Keown, and Scott, 1991 supported this theory of irrelevance. Miller and Modiglianis conclusion on the irrelevance of dividend policy presented a tough challenge to the conventional wisdom of time up to that point, it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy as investors seem to prefer dividends over capital gains (JM Samuels, FM.Wilkes and R.E Brayshaw). Benartzi et al. (1997) conducted an extensive study and concluded that Lintners model of dividends remains the finest description of the dividend setting process available. Baker et al. (2001) conducted a survey on 630 NASDAQ-listed firms and analyzed the responses from 188 CFOs about the importance of 22 different factors that influence their dividend policy, they found that the dividend decisions made by managers were consistent with Lintners (1956) survey results and model. Their results also suggest that managers pay particular attention to the dividend policy of the firm because the dividend decision can affect firm value and, in turn, the wealth of stockholders, thus dividend policy requires serious attention by the management. E.F Fama and K.R French (2001) investigated the characteristics of companies paying dividends and concluded that the top most characteristics that affect the decision to pay dividends are Firm size, Profitability, and Investment opportunities. They studied dividend payment in the United States and found that the proportion of dividend payers declined sharply from 66% in 1978 to 20.8% in 1999, and that only about a fifth of public companies paid dividends. Growth companies such as Microsoft, Cisco and Sun Microsystems were found to be non-dividend payers. They also explained that the probability that a firm would pay dividends was positively related to profitability and size and negatively related to growth. Their research concluded that larger firms are more profitable and are more likely to pay dividends, than firms with more investment opportunities. The relationship between firm size and dividend policy was studied by Jennifer J. Gaver and Kenneth M. Gaver (1993). They suggested t hat A firms dividend yield is inversely related to the extent of its growth opportunities. The inference here is that as cash flow increases, the coefficient of dividend decreases, indicating that smaller firms that have greater investment opportunities thus they tend not to make dividend payment while larger firms tend to have proactive dividends policy. Ho, H. (2003) undertook a comparative study of dividend policies in Japan and Australia. Their study revealed that dividend policies in Australia and Japan are affected by different financial factors. Dividend policies are affected positively by size in Australia and liquidity in Japan. Naceur et al (2006) examined the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. His research indicated that highly profitable firms with more stable earnings could afford larger free cash flows and thus paid larger dividends. Li and Lie (2006) reported that large and profitable firms are more likely to raise their dividends if the past dividend yield, debt ratio, cash ratio are low. A study was conducted by Norhayati Mohamed, Wee Shu Hui, Mormah Hj.Omar, and Rashidah Abdul Rahman on Malaysian companies over a 3 year period from 2003-2005. The sample was taken from the top 200 companies listed on the main board of Bursa Malaysia based on market capitaliza tion as at 31December 2005. Their study concluded that bigger firms pay higher dividends. or the purpose of finding out how companies arrive at their dividend decisions, many researchers and theorists have proposed several dividend theories. Gordon and Walter (1963) presented the Bird in Hand theory which suggested that to minimize risk the investors always prefer cash in hand rather than future promise of capital gain. This theory asserts that investors value dividends and high payout firms. As said by John D. Rockefeller (an American industrialist) The one thing that gives me contentment is to see my dividend coming in. For companies to communicate financial well-being and shareholder value the easiest way is to say the dividend check is in the mail. The bird-in-hand theory (a pre-Miller-Modigliani theory) asserts that dividends are valued differently to capital gains in a world of information asymmetry where due to uncertainty of future cash flow, investors will often tend to prefer dividends to retained earnings. As a result the value of the firm would be increased as a higher payout ratio will reduce the required rate of return (see, for example Gordon, 1959). This argument has not received any strong empirical support. Dividends, paid by companies to shareholders from earnings, serve as an important indicator of the strength and future prosperity of the business. This explanation is known as signaling hypothesis. Signaling is an example factor for the relevance of dividends to the value of the firm. It is based on the idea of information asymmetry between managers and investors, where managers have private information about the firm that is not available to the outsiders. This theory is supported by models put forward by Miller and Rock (1985), Bhattacharya (1979), John and Williams (1985). They stated that dividends can be used as a signaling device to influence share price. The share price reacts favorably when an announcement of dividend increase is made. Few researchers found limited support for the signaling hypothesis (see Gonedes, 1978, Watts, 1973) and there are other researchers, who supported the hypothesis, for example, in Michaely, Nissim and Ziv (2001), Pettit (1972) and Bali (2003). The tax-preference theory assumes that the market valuation of a firms stocks is increased when the dividend payout ratios is low which in turn lowers the required rate of return. Because of the relative tax liability of dividends compared to capital gains, investors need a large amount of before-tax risk adjusted return on stocks with higher dividend yields (Brennan, 1970). On one side studies by Lichtenberger and Ramaswamy (1979), Poterba and Summers, (1984), and Barclay (1987) have presented empirical evidence in support of the tax effect argument and on the other side Black and Scholes (1974), Miller and Scholes (1982), and Morgan and Thomas (1998) have either opposed such findings or provided completely different explanations. The study by Masulis and Trueman (1988) model dividend payments in form of cash as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm dividend policy. As the tax l iability on dividends increases (decreases), the dividend payment decreases (increases) while earnings reinvestment increases (decreases). According to Farrar and Selwyn (1967), in a partial equilibrium framework, individual investors choose the amount of personal and corporate leverage and also whether to receive corporate distributions as dividends or capital gains. Barclay (1987) has presented empirical evidence I support of the tax effect argument. Others, including Black and Scholes (1982), have opposed such findings or provided different explanations. Farrar and Selwyns model (1967) made an assumption that investors tend to increase their after tax income to the maximum. According to this model corporate earnings should be distributed by share repurchase rather than the use of dividends. Brennan (1970) has extended Farrar and Selwyns model into a general equilibrium framework. Under this, the expected usefulness of wealth as a system of barter is maximized. Despite being more robust both the models are similar as regards to their predictions. According to Auerbachs (1979) discrete-time, infinite-horizon model, the wealth of shareholders is maximized by the shareholders themselves and not by firm market value. If there does, infact, exist a difference between capital gains and dividends tax; firm market value maximization is no longer determined by wealth maximization. He states that the continued undervaluation of corporate capital leads to dividend distributions. The clientele effects hypothesis is another related theory. According to this theory the investors may be attracted to the types of stocks that fall in with their consumption/savings preferences. That is, investors (or clienteles) in high tax brackets may prefer non-dividend or low-dividend paying stocks if dividend income is taxed at a higher rate than capital gains. Also, certain clienteles may be created with the presence of transaction costs. There are several empirical studies on the clientele effects hypothesis but the findings are mixed. Studies by Pettit (1977), Scholz (1992), and Dhaliwal, Erickson and Trezevant (1999) presented evidence consistent with the existence of clientele effects hypothesis whereas studies by Lewellen et al. (1978), Richardson, Sefcik and Thomason (1986), Abrutyn and Turner (1990), found weak or contrary evidence. There is an assumption that the managers do not always take steps which would lead to maximizing an investors wealth. This gives rise to another favorable argument for hefty dividend payouts which shifts the reinvestment decision back on the owners. The main hitch would be the agency conflict (conflict between the principal and the agent) arising as a result of separate ownership and control. Therefore, a manager is expected to move the surplus funds from the high retained earnings into projects which are not feasible. This would be mainly due to his ill intention or his in competency. Thus, generous dividend payouts increase a firms value as it reduces the managements access to free cash flows and hence, controlling the problem of over investment. There are many more agency theories explaining how dividends can increase the value of a firm. One of them was by Easterbrook (1984); he proposed that dividend payments reduce agency problems in contrast to the transaction cost theory which is of the view that dividend payments reduce the value as it forces to raise costly finances from outside sources. His idea is that if the dividends are not paid, there is a problem of collective action that tends to lead to hap-hazard management of the firm. So, dividend payouts and raising external finance would attract auditory and regulatory measures by financial intermediaries like investment banks, respective stock exchange regulators and the potential investors as well. All this monitoring would lead to considerable reduction of agency costs and appreciate the market value of t he firm. Moreover, as defined by Jenson and Meckling (1976), Agency costs=monitoring costs+ bonding, costs+ residual loss i.e. sum of agency cost of equity and agency cost of debt. Hence, Easterbrook (1984) noted that dividend payments and raising new debt and its contract negotiations would reduce potential for wealth transfer. The realization for potential agency costs linked with separation of management and shareholders is not new. Adam Smith (1937) proposed that management of earlier companies is wayward. This problem was highly witnessed during at the time of British East Indian Companies and tracking managers was a failure due to inefficiencies and high costs of shareholder monitoring (Kindleberger, 1984). Scott (1912) and Carlos (1922) differ with this view point. They agree that although some fraud existed in the corporations, many of the activities of the managers were in line with those of the shareholders interests. An opportune and intelligent manager should always invest the surplus cash available into those opportunities which are well researched to be in the best interest of the shareholders. Berle and Means (1932) was the first to discover the insufficient utilization of funds which are surplus after other investment opportunities taken by the management. This thought was further promoted by Jensens (1986) free cash flow hypothesis. This hypothesis combined market information asymmetries with the agency theory. The surplus funds left after all the valuable projects are largely responsible for creation of the conflict of interest between the management and the shareholders. Payment of dividends and interest on other debt instruments reduce the cash flow with the management to invest in marginal net present value projects and for other perquisite consumptions. Therefore, the dividend theory is better explained by the combination of both the agency and the signaling theory rather than by any o ne of these alone. On the other hand, the free cash flow hypothesis rationalizes the corporate takeover frenzy of the 1980s Myers (1987 and 1990) rather than providing a clear and comprehensive dividend policy. The study by Baker et al. (2007) reports, that firms paying dividend in Canada are significantly larger and more profitable, having greater cash flows, ownership structure and some growth opportunities. The cash flow hypothesis proposes that insiders to a firm have more information about future cash flow than the outsiders, and they have incentivized motives to leak this to outsiders. Lang and Litzenberger (1989) check the cash flow signaling and free cash flow explanations of the effect of dividend declarations on the stock prices. This difference between permanent and temporary changes is also explored in Brook, Charlton, and Hendershott (1998). However, this study is based on the hypothesis that dividend changes contain cash flow information rather than information about earnings. This is the cash flow signaling hypothesis proposing that dividend changes signal expected cash flows changes. The dividend decisions are affected by a number of factors; many researchers have contributed in determining which determinant of dividend payout is the most significant in contributing to dividend decisions. It is said that the primary indicator of the firms capacity to pay dividends has been Profits. According to Lintner (1956) the dividend payment pattern of a firm is influenced by the current year earnings and previous year dividends. Pruitt and Gitmans (1991) survey of financial managers of 1000 largest U.S companies about the interplay among the investment and dividend decisions in their Firms reported that, current and past year profits are essential factors influencing dividend payments. The conclusion derived from Baker and Powells (2000) survey of NYSE-listed firms is that the major determinant is the anticipated level of future earnings and continuity of past dividends. The study of Aivazian, Booth, and Cleary (2003) concludes that profitability and return on equity positively correlate with the size of the dividend payout ratio. The study by Lv Chang-jiang and Wang Ke-min (1999) on 316 listed companies in China that paid cash dividends during 1997 and 1998 by using modified Lintner dividend model, suggested that the dividend payout ratio is due to the firms current earning level. Other researchers like Chen Guo-Hui and Zhao Chun-guang (2000), Liu Shu-lian and Hu Yan-hong (2003) also concluded their research on the above stated understanding about dividend policy of listed companies in China. A survey done by Baker, Farrelly, and Edelman (1985) and Farrelly, Baker, and Edelman (1986) on 562 New York Stock Exchange (NYSE) firms with normal kinds of dividend polices in 1983 suggested that the major determinants of dividend payments were the anticipated level of future earnings and the pattern of past dividends. DeAngelo et al. (2004) findings suggest that earnings do have some impact on dividend payment. He stated that the high/increasing dividend concentration may be the result of high/increasing earnings concentration. Goergen et al. (2005) study on 221 German firms shows that net earnings were the key determinants of dividend changes. Baker and Smith (2006) examined 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to understand how they set their dividend policies. Their study showed that for the matched firms, the pattern of past dividends and desire to maintain a long-term dividend payout ratio elicit the highest level of agreement from respondents. The study by Ferris et al. (2006) found mixed results for the relation between a firms earnings and its ability to pay dividends. Kao and Wu (1994) used a time series regression analysis of 454 firms over the period of 1965 to1986, and showed that there was a positive relationshi p between unexpected dividends and earnings. Carroll (1995) used quarterly data of 854 firms over the period of 1975 to 1984, and examined whether quarterly dividend changes predicted future earnings. He found a significant positive relationship. Liquidity is also an important determinant of dividend payouts. A poor liquidity position would generate fewer dividends due to shortage of cash. Alli et.al (1993), reveal that dividend payments depend more on cash flows, which reflect the companys ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. They claim current earnings do no really reflect the firms ability to pay dividends. A firm without the cash flow back up cannot choose to have a high dividend payout as it will ultimately have to either reduce its investment plans or turn to investors for additional debt. The study by Brook, Charlton and Hendershott (1998) states that, Firms expecting large permanent cash flow increases tend to increase their dividend. Managers do not increase dividends until they are positive that sufficient cash will flow in to pay them (Brealey-Myers-2002). Myers and Bacons (2001) study shows a negative relationship between the liquid ratio and dividend payout. For companies to enable them to enhance their dividend paying capacity, and thus, to generate higher dividend paying capacity, it is necessary to retain their earnings to finance investment in fixed assets. The study by Belans et al (2007) states that the relationship between the firms liquidity and dividend is positive which explains that firms with more market liquidity pay more dividends. Reddy (2006), Amidu and Abor (2006) find opposite evidence. Lintner (1956) posited that the level of retained earnings is a dividend decision by- product. Adaoglu (2000) study shows that the firms listed on Istanbul Stock Exchange follow unstable cash dividend policy and the main factor for determining the amount of dividend is earning of the firms. The same conclusion was drawn by Omet (2004) in case of firms listed on Amman Securities Market and he further states that the tax imposition on dividend does not have the significant impact on the dividend behavior of the listed firms. The study by Mick and Bacon (2003) concludes that future earnings are the most influential variable and that the past dividend patterns as well as current and expected levels are empirically relevant in explaining the dividend decision. Empirical support for Lintners findings, that dividends were indeed a function of current and past profit levels and were negatively correlated with the change in sales was found by Darling (1957), Fama and Babiak (1968). Benchman a nd Raaballe (2007) discovered that the propensity to pay out dividends is positively correlated to retained earnings. Also, the study by Denis and Osobov (2006) states that retained earnings are a significant dividend characteristic for non- US firms including UK, German, and French firms. One of the motives for dividend policy decision is maintaining a moderate share price as poor stock price performance mostly conveys negative information about firms reputation. An empirical research took by Zhao Chun-guang and Zhang Xue-li et al (2001) on all A shares listed companies listed in Shenzhen and Shanghai Stock Exchange, states that the more cash dividends is paid when the stock prices are high. Chen Guo-Hui and Zhao Chun-guang (2000) undertook a research on all A shares listed before 1996 and paid dividend into share capital in 1997 as their sampling, and employed single-factor analysis, multifactor regression analysis to analyze the data. Their research showed a positive stock price reaction to the cash dividend, stock dividend policy. Myers and Bacon (2001) discussed that the debt to equity ratio was positively correlated to the dividend yield. Therefore firms with relatively more investment opportunities would tend to be more geared and vice versa (Ross, 2000). The study by Hu and Liu, (2005) declares that there is a positive correlation between the cash dividend the companies pay and their current earnings, and a inverse relationship between the debt to total assets and dividends. Green et al. (1993) questioned the irrelevance argument and investigated the relationship between the dividends and investment and financing decisions .Their study showed that dividend payout levels are decided along with investment and financing decisions. The study results however do not support the views of Miller and Modigliani (1961). Partington (1983) declared that firms motives for paying dividends and extent to which dividends are decided are independent of investment policy. The study by Higgins (1981) declares a direct link between growths and financing needs, rapidly growing firms have external financing needs because working capital needs normally exceed the incremental cash flows from new sales. Higgins (1972) suggests that payout ratios are negatively related to firms need top fund finance growth opportunities. Other researchers like Rozeff (1982), Lloyd et al. (1985) and Collins et al. (1996) all show significantly negative relationship between historical sales growth and dividend payout whereas D, Souza (1999) however shows a positive but insignificant relationship in the case of growth and negative but insignificant relationship in case of market to book value. Jenson and Meckling (1976) find a strong relationship between dividends and investment opportunities. They explain, in some circumstances where firms have relative uptight disposable cash flow and a number of investment opportunities have, the shareholders are ready to accept low dividend payout ratio. From the investors point of view, the dividend payments represent definite evidence of a companys worth. A company that expects sufficient future cash flows, large enough to meet debt obligations and dividend payments, will increase dividend payout. Howe (1998) believed that the actions of the managers might convey information to the investors outside as they are more informed about the future prospects of their firms than the market. Reddy (2002) studied dividend behavior and expressed his views on the observed behavior with the help of signaling hypothesis. The undervalued firms (assessed by the price

Organizational Structures that are Suitable in the Business Circumstances Today :: Papers

Organizational Structures that are Suitable in the Business Circumstances Today The world today is experiencing the most rapid pace of change in its history. The purpose of this essay is to discuss what organizational structure is suitable in the business circumstances of today. This essay will argue that ‘the environment of the 21st century is such, that to be effective, organizations are tending towards less formalized structures than used in the past’. To support this argument, firstly organizations will be defined, and then the properties that make an organization effective will be identified. Next organizational structure will be appraised, and what constitutes business environment will be established. Finally the influences globalisation and technology have had on the will be addressed in relation to changes in organizational structure. Robbins et al. define an organization as ‘a deliberate arrangement of people to accomplish some specific purpose’ (2000: 5). While Wood et al. consider organizations as ‘collections of people working together in divisions of labour to achieve a common purpose’ (1998: 15). These definitions fits a wide variety of groups such as sporting clubs, religious bodies, voluntary associations etcetera however for this essay will concentrate on business organizations. A Business organizations’ purpose is to deliver and product or service in such a way that a benefit is gained for the organization, profit or goodwill for example. The Macquarie dictionary is defines effective as ‘producing the intended or expected result and producing a striking impression’ (1990). Thus an effective organization is an arrangement of people that successfully achieved their purpose, ie. a large profit of fine product, and have done so in a noteworthy, exemplary, commendable method or fashion. It is understood that to be effective an organization must be efficient. Efficiency is defined as ‘the relationship between inputs and outputs, the goal of which is to minimize resource cost’ (Robbins et al., 2000: 8). Usually a business organizations’ success is primarily measured in financial profit, though this is not the only benchmark. Organizational structure is defined as ‘the organization’s formal framework by which job tasks are divided, grouped and coordinated’ (Robbins et al., 2000: 351). Generally an organizations’ structure is considered to be the managerial framework that directs the non-managerial employees. Traditionally western organizational structure can be argued to have developed from the feudal system of government where a strict pyramidal power and class structure existed.

Sophie’s World Guide

THEORY OF KNOWLEDGEFALL 2012 SOPHIE’S WORLD: READING GUIDE DR. HALL The novel Sophie’s World (1991) by Norwegian author Jostein Gaarder offers a tour of the history of Western philosophy as well as a post-modern detective story. We chose this reading for IB Seniors because it ties in so well with our fundamental TOK questions and issues. Because of the intellectual journey the novel charts, it makes a companion to Siddhartha which adds, however, an eastern counterpoint to the western orientation of Gaarder’s novel.For analysis and discussion purposes, I have divided the novel into the following five sections. Please type out or write neatly your responses to this guide on separate pages. Cite page numbers for all passages you paraphrase or quote in ( ). You are welcome to add your own comments/critiques. Approximately one section will be due per week during the first 5 – 6 weeks of the first quarter. We will discuss your responses during the assigned weeks of class as well as take reading quizzes on each section. We may also write practice TOK essays based on ideas and issues presented in Sophie’s World.Note that this book is a translation. It will enhance your understanding if you look up Gaarder on the web. Print and critique an article you find provocative; this will be part of your article file. I)â€Å"The Garden of Eden† – â€Å"Aristotle†pages 1 – 120 This opening section introduces Sophie and her world of home and school. It sets up the relationship between Sophie and her philosophy teacher, who communicates with her primarily through letters. It reviews some of the material we studied in the spring (Socrates) and some you have studied earlier at Central (Greek mythology). Make a list of the characters as you are introduced to them. Like Sophie, you will begin trying to identify Hilde and her father. 2 For each section make a list of the major schools of philosophy mentioned, notinga charact eristic philosopher and describing his main ideas.(Do this on the basis of Gaarder’s information although you may want to find out more about ones that intrigue you. ) Cite page ##s in text and/or sources if you look up information. 3Find several examples of how the PLOT of the novel reflects the various ideas about which Sophie is learning. Find several examples of Gaarder’s use of the Socratic method. 5Compare Plato’s ideal society with the ideal commonwealth described by Gonzalo in Act II of The Tempest. II)â€Å"Hellenism† – â€Å"The Baroque†pages 121 – 232 In this section you will discover the identity of Sophie’s teacher. You will also move forward in time from the Greek philosophical tradition to its successors in European history up to the l600s. 1Describe the discussions of mysticism and consider how they might tie in with a work like Antigone or Chronicle of a Death Foretold. 2Find the image of history as a clock; th en try to draw the clock. This may remind you of the learning style represented by the color wheel in Girl With a Pearl Earring. ) 3Make a note when you run across vocabulary that we have defined in TOK. 4 Continue your list of key philosophers and their ideas (or at least the characteristics of key philosophical periods). 5In light of Siddhartha and other knowledge, give examples of or observations on Western orientation in Gaarder’s depiction of the development of ideas. III)â€Å"Descartes† – â€Å"Kant†pages 233 – 341 In this section you will begin to resolve the mysteries of Hilde’s and her father’s identities.There will by crossovers between the original plot with Sophie and the story of Hilde. 1Why does Gaarder chose to structure his narrative this way? How may this structure demonstrate the philosophical ideas being presented? 2Pay particular attention to the division of mind/body in Descartes and to the similarities/differenc es between Berkeley and Bjerkely. 3 Recall our discussions of the Enlightenment in the work and writing style of Benjamin Franklin. Locate some passages that help illuminate (haha) Franklin’s text. 4FOR NEW JERUSALEM: SEE SECTION ON SPINOZA, 247-256.Reflect on Alberto’s lecture in light of the play. 5Explain Locke’s relationship to empiricism. Check meanings of the term. 6 Compare/contrast this discussion of Kant with discussion of Kant and duty ethics in our TOK textbook. IV)â€Å"Romanticism† – â€Å"Freud†pages 342 – 446 This section features Marx, Darwin, and Freud, sometimes called â€Å"The Triple Thinkers† for their impact on late 19th – early 20th century history, politics, economics, science, the arts, and human behavior. Notice that â€Å"philosophy† has diversified into what we would call separate disciplinary fields. Do you think the Freud chapter is aptly placed and persuasive? Why or why not, based o n what you know of Freud from Psychology class and on the other kinds of thinkers included in this book? 2Compare the depiction of Freud in Gaarder with that in Brave New World. 3Discuss the satire of Darwinism in Brave New World with the explanation of evolution in Sophie’s World. Note the similar titles. 4Do you agree that â€Å"philosophy is the mirror of the world spirit†? (371). Can you give some illustrations of this claim from your other readings or experiences? V)â€Å"Our Own Time† – â€Å"The Big Bang†pages 447 – 513 Please look up a definition of â€Å"existentialism.† Do you agree â€Å"To exist is to create your own life† (458)? Who is Sartre? Who is Camus? You read this Algerian-born writer’s novel The Stranger in junior IB English. 2Compare definition of â€Å"paradigm shift† on 464 with Thomas Kuhn’s. 3What book does Alberto buy Sophie? Explain. 4What happens at the garden party? Apply †Å"big bang theory† to the plot(s) of the novel. 5Compare/contrast Gaarder’s and Kuhn’s (and Franklin’s) attitude toward science, based on the chaotic penultimate scene of each novel. 6Why might the book conclude in a rowboat on a lake? Explain the political relevance of Hilde’s father’s deep involvement in Lebanon and in United Nations policies. What are the similarities and differences between Lebanon and the struggle Khaled Hosseini describes in A Thousand Splendid Suns (and The Kite Runner)? What is the relevance of both of these contexts for IB? What is happening in the spring/summer of 2011 in the Middle East that could be understood through the lens of Gaarder’s novel? 8Go back and read the epigraph by Goethe: is this what the novel is designed to illustrate? How does it do so? Who is Goethe? What is the relevance of the epigraph for TOK?

Four Square Lumber Mill Essay

Question 1: Identify and discuss the major issue(s) in the case In the requisition of the carborundum blades, it specifically mentioned that no substitute for Swiss blade is permitted but Iqbal still trying to find alternative solution available in the local market. He found the alternative sources and persuades the sawing operation to perform the trial. The trial is failed and now Iqbal convinced that he being sabotage, he accused the sawing operation team was purposely unfairly treated the local blades during the operation to ensure the local blades would fail. This is because, during the discussion with Sam, foreman of sawing operation, he is reluctant to proceed with the trial and very confident that the local brand will not work. His expression and behaviour showed that he feel happy to prove that the trail is failed. Question 2: Key fact of the case When Iqbal viewed the requisition of carborundum saw blades at Tampin plants, he found that the specialised blade made from Switzerland and purchase through local supply in Penang at cost of $220, DDP Penang. The requisition specified that no substitutes were permitted and Iqbal went to look for other alternative sourcing for better saving. Iqbal found two suppliers that producing local blade and was informed that the local brand, Dipson 412 is same quality as the Swiss brand. They quoted price of $112.50 and $115; both are DDP Tampin. Sam, foreman of sawing operation at Four Square is reluctant to try the local brands as he confident it would not stand up as per the Swiss brand. Finally he agreed but told Iqbal that he knows that the local brand will not work. Iqbal proceed with the trial purchase, and put provision that blades could returned for credit if it not prove equal to Swiss brand. The trial is fail as Sam showed Iqbal the sample of two local blades which burned during due to excess heat during the production. Sam expression was happy when he told Iqbal about the situation. Iqbal was convinced that the production workers had treated the blade unfairly to ensure that both blades trials unsuccessful. Question 3: The main problem in the case The trial failed and Iqbal convinced that the sawing operation team purposely treated the local blades unfairly to ensure that the trial is fail. From earlier discussion with Sam, the foreman of the sawing operation, he expressed his reluctant to proceed with the trial and informed Iqbal that he is confident that the local blades would not match the quality of the Swiss blade. Sam was also expressed his satisfaction when he bring the result to Iqbal showing the burned blades as prove that both local brands is not as equal to the Swiss blade. Question 4: What could Iqbal done to avoid this situation Iqbal could do the precaution step by monitoring the whole process of trial to ensure that the blades are being treated correctly in the operation process. This is important especially when during the discussion the foreman, Sam seems very reluctance of doing the trial. In order to avoid being disrupted or sabotage, he should closely monitor the entire process. Other than that, he could request the suppliers to involve in the trial process. Besides ensuring the blades are treated fairly, the supplier could share their expertise and able provide immediate advice if there is problem occurs. Question 5: What should Iqbal do now Iqbal should discuss with the management regarding the issues and point out his thought. He should get the independent opinion on the issues. But he should also bear in mind that his accusation may turn up to be wrong and the sawing operation team is not guilty. In handling the issue of possibility of being sabotage it could be sensitive and this will affect the positive relationship among co-workers in future. Iqbal could also do another trial if he convinced it will work but this time he or his trusted person which had expertise of understanding the procedure should monitor the process to ensure the blade is being handled fairly and trial is done properly. By doing another trial it would definitely increase the operation costs. He could also further discuss with the supplier of local brand and show the burned blades. By doing so, he could use the supplier expertise to gain information whether the blades has been treated fairly or not by examining the burned blades and find out the possible causes. Question 6: Suggestion for improving the situation of the company Open for substitutes Providing the clause that no substitutes were permitted which means depending on one source of supplier could be high risk for the Company. It also not encouraging the operation team to try new change as normally the operation team prefer the normal procedure that they already familiar with. Involvement of supplier Involvement of the supplier during the process could help to ensure that the process is being done properly and it would also help to provide the fast response for solution if there is problem during the sawing operation process. Expertise To ensuring the trial is done properly without any possibility of unfairly treated, expertise, the engineer should be in place to monitor the whole process.