Finance and Growth Strategies - Essay Example

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Finance and Growth Strategies

In fact, more mature companies tend to have better payout ratio, with regular increases in the rates. The firm's dividend policy is generally affected by a number of factors like;
1. Future Expansion Plans and Capital Requirements: If the company has expansion plans, diversification plans etc. then it will prefer to have a large reserve of its resources and funds readily available for the new venture. The requirement could be in the form of capital for setting up a new production facility or liquid funds to launch a marketing blitz for a new range of products or tapping a new market.
2. Competitive Environment: Today we are living in an era of globalization and liberalization. This has led to intense competition in many sectors and industries. This is particularly the case for companies in consumer goods and retail industry. Beckett-Camarata et al. (1998) present a conceptual overview of relationship management in a rapidly changing global environment:
"In a global economy, all system members are interdependent and are customers. Companies are restructuring (i.e. downsizing) to fund only those core competencies that are key to their profitability and long-term survival. ...Show more


Ans: Paying periodic dividend to its shareholders, financers of a company is generally considered a way to pay back for the confidence shown by them in the company and its management. Bhattacharyya (2007) states that it was Lintner in 1956 who is credited to have undertaken one of the earliest researches surveying the corporate managers for understanding how they arrived at a dividend policy…
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