Those companies use that undistributed earnings to reinvest in the business and thereby increase the size of the organisation. Evidently, this practice may adversely affect the financial interests of company shareholders. However, the current market position of the firm particularly influences the implications of non-payment of dividends on the business. This paper will specifically discuss what happens whether or not firms pay dividends. Why some companies pay dividends while some others do not? Undoubtedly, a company tends to pass its earnings to shareholders as remuneration for their investments and hence to retain their interests in the company. When an organisation pays attractive dividends, existing shareholders can significantly gain from their investments. It forces shareholders to stay with the company, and the payment of dividends may also assist the company to attract new potential stakeholders (‘Investor Relations’ 2010). It is clear that dividends paid for a fiscal period is appeared on the consolidated balance sheet prepared at the end of that period. Investors mainly scrutinise current dividend rates so as to decide whether or not to purchase the stocks of the firm. Usually, if investors find that the company offers poor dividend rates, they would not be much interested in investing in that firm. It must be noted that the price of a share is greatly affected by the demand for that particular share in the stock market. Thus, poor dividend rates and non-payment of dividends may cause the firm’s stock prices to decline. Evidently, no company would be willing to accept a decline in its share prices. Therefore, today many of the companies strive to meet its investors’ interests and to attract new potential investors by paying attractable dividends to stockholders. In contrast, rapidly growing concerns would keep maximum money with them so as to promote further growth. Hence, those concerns would not pay dividends. Even a mature organisation which believes that it has further growth potential may choose to reinvest its earnings into the business. Companies that do not pay dividends may use the saved money to invest in a new project, acquire new assets, repurchase their shares that have been sold to outsiders, or even to buy out a running company. Many firms avoid paying dividends to eliminate the huge expenses of issuing new stocks. By keeping their full earnings with them, companies can get rid of the risk of raising funds to meet their various needs. Does it matter whether or not firms pay dividends? The implications of payment or non-payment of dividends on the business may vary according to the investors’ actual investment interests. If the business is still rapidly growing and the investor has long term interests in the company, then non-payment of dividends would not matter. More precisely, when an investor aims at high rates of returns on his investment in the long term, he would be willing to sacrifice his short term financial interests for the long term growth of the firm. As discussed already, the reinvestment of earnings in the business would greatly assist a growing organisation to fuel its business growth. Therefore, a financially sound investor would support reinvestment of profits for the further growth of the business. From a tax perspective, non-payment of dividends can better serve the financial interes
Does it matter whether or not firms pay dividends? Why? Introduction Generally companies pass on a fixed percentage of their net profit to their stakeholders in reward to the investment risk taken by investors. Dividend is the key catalyst that persuades shareholders to purchase stakes of an organisation…
With the ever accelerating pace of change on the wake of globalization the need for strategy has increased manifolds. Every business big or small needs to develop a strategy for successfully running the business. Strategy is provides the long term picture and approach to the business and answers the question why business is being done in certain way.
The author point out towards certain options available for the students to manage the finance for their studies. The article basically strives to provide some solution to the problem of getting finance for the higher education. In the article, the author includes different possibilities that could work to generate finance for students’ higher education and discuss the pros and corns of each of the described method.
The world is composed of atoms which are the smallest indivisible particles of matter “made up of negatively charged electrons in orbitals around positively charged nuclei” (RBI 1988, p.53). Atoms integrate through interactions between electrons to form units termed as molecules.
There are two types of dividend payment modes. These are cash dividend and stock dividend. In case of cash dividend the shareholders receive dividend cheque from the companies of which they hold the shares.
Many schools of thought have taken conflicting views on this issue. The " dividend irrelevance" group of thought will reveal that dividends have nothing to do with firm value because there is no tax disadvantage to an investor to receiving dividends, and that firms can raise funds in capital markets for new investments without having to go through high issuance costs.
o be taxable income to the shareholders.(Frenczy 2008, 8-21) These also underscore that since the firm that issued the dividends did not receive offsetting deduction, tax is paid both at corporate and individual levels as a consequence.
Dividends are often compared with capital
the effectiveness of an organization, human potential that includes talents, time and individual capabilities should be managed well according to Brewster (1997).
The term human resource management became popular in the 1970s as a management approach, which aimed at
This ratio can be used by the investors and financial institutions while studying the financial condition of any firm. The higher the debt to equity ratio of the firm, the riskier the firm is in term of investment. This debt to equity